Spotify buys 'cover song' licensing firm to tackle copyright risks

[Wilhelm]

Spotify , the world's largest music streaming service, said on Thursday it is to buy Loudr.fm, a San Francisco-based provider of licensing technology to help it to locate songwriters and pay them royalties they are due.

 The Spotify logo hangs on the facade of the New York Stock Exchange as the company lists its stock 
FILE PHOTO: The Spotify logo hangs on the facade of the New York Stock Exchange in New York, U.S., April 3, 2018. REUTERS/Lucas Jackson
13 Apr 2018 06:10AM

LONDON/STOCKHOLM: Spotify , the world's largest music streaming service, said on Thursday it is to buy Loudr.fm, a San Francisco-based provider of licensing technology to help it to locate songwriters and pay them royalties they are due.

The acquisition helps address a major weakness Spotify has warned exists in its business model, namely locating and ensuring the right artists get paid for their copyrighted work, an issue which, left unaddressed, leaves it open to lawsuits.

Financial terms of the deal, the first since it began trading on the New York Stock Exchange earlier this month, were not disclosed.

Spotify was hit late last year with a lawsuit seeking damages of up to US$1.6 billion by Wixen Publishing, a California-based company that represents artists including Tom Petty, Neil Young, Rage Against the Machine and Missy Elliott.

Loudr was set up in 2013 by its three co-founders to simplify the process for musicians who publicly perform songs by other artists to identify, track and pay royalties for so-called "mechanical licenses" owed to music publishers. These may include cover versions of songs, samples, remixes or medleys.

The company offers a system for automatically acquiring mechanical licenses under U.S. copyright laws, which do not require musicians to engage in up-front licensing negotiations before performing songs by other artists. Charges for licenses range from US$35 for electronic filings to US$85 for paper ones.

Loudr will relocate to Spotify's offices in New York, the company said in a blog post.

Spotify has made at least ten modest, typically technology focused acquisitions in recent years to improve its service.

Shares of Spotify closed at US$149.10, little changed on the day.