Music-streaming giant Spotify – rumoured to be on the verge of going public – is being sued by a music publishing company for $1.6bn.
Spotify has more than 200 million users – 60 million paid-up subscribers and 140 million using the free ad-based service – compared with 30 million for Apple’s new paid music-streaming offering.
According to a report in the Wall Street Journal, Swedish-based Spotify is “expected to receive approval from the Securities and Exchange Commission to move forward with a listing of its shares on the New York Stock Exchange”.
However a law suit from Wixen Music Publishing could throw a spanner in the works over Spotify’s plans for an initial public offering (IPO).
$150,000 damages per song
Wixen, which handles music by artists such as Tom Petty, The Doors and Neil Young, alleges that Spotify has used artists’ music “without a license and without compensation,” according to documents filed in a California court on Friday.
More than 10,000 songs are listed in the law suit and Wixen is seeking the maximum damages allowed under US copyright law of $150,000 for each song.
Wixen alleges that Spotify “took a short cut” and only obtained rights to the sound recording for each song, when it should also have obtained rights for the musical composition.
The lawsuit comes just three weeks after Spotify announced it was teaming up with Chinese internet behemoth Tencent Holdings.
Tencent, which has a market capitalisation of roughly $500bn, has 120 million people signed up to its own music-streaming service, and 700 million monthly active users.
The deal saw Spotify and Tencent Music Entertainment Group buy minority stakes in each other, and TME also plans to make further stock purchases in Spotify.
A joint announcement said the move was aimed at "strengthening relationships between the two most popular music streaming platforms in the world”.
According to the Wall Street Journal report, Tencent’s investment in Spotify values the company at around $20bn, with an IPO provisionally slated for March or April this year.