Spotify face $1.6 billion copyright lawsuit

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The news comes at an awkward moment for the tech company, which is reportedly preparing for a stock market sale. Wixen handles copyright management and royalty compliance for artists including Tom Petty, The Doors, Neil Young and Missy Elliot.

Before Spotify launched in the USA, the company made deals with major record labels to obtain the appropriate rights to the sound recording copyrights in the songs, the lawsuit states.

The company was founded in 2006 and has pioneered legal streaming, which has become the music industry's biggest source of growth despite early scepticism.

Spotify is gearing up to launch an initial public offering, expected as soon as first quarter of 2018, after filing confidential documents with the SEC last month, according to reports. Spotify declined to comment. By pursuing a direct listing, Spotify can skirt underwriting fees typically required for an IPO, though the move could hurt its shares because underwriters won't be evaluating or buoying the price.

The suit alleges that the streaming giant failed to get the proper mechanical licences to "to reproduce and/or distribute musical compositions on its service". In 2016, it paid over $20m in outstanding royalties to a number of publishers via the National Music Publishers' Association, while in May 2017, it settled a lawsuit with three small publishers, including the estate of Jaco Pastorius, for over $43m. The lawsuit, filed by Wixen Music Publishing, alleges the service uses thousands of songs it hasn't licensed.