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Rhapsody Sued in Class Action for Failing to pay Royalties to Certain Artists

When someone files a lawsuit, it’s rarely just about the money. In many cases it’s about an individual or company participating in illegal practices and the plaintiff wants to make sure that issue is addressed. Some complaints include a request for the court to file an injunction to prevent the defendant from ever participating in the illegal behavior again, but sometimes the defendant remedies the problem before the court can act.

On its face, that may seem like a good idea, because it cuts off the allegations at the head, but a company changing its practices can actually work against it if they’re facing a lawsuit. By changing its practices, the defendant is essentially admitting that it was doing something wrong. Plaintiffs who may have been injured before the company changed their policies now have a stronger claim against the company.

One such case of this is the class action lawsuit filed against Rhapsody, the music streaming company. The lawsuit is very similar to one that was previously filed against Spotify, a different music streaming company.

The lawsuit alleges Rhapsody failed to pay mechanical royalties on the music they were streaming to their more than three million paying subscribers. Mechanical royalties are usually paid on a specific type of publishing license, which is often dispensed through Harry Fox Agency (HFA). The license usually requires Notices of Intent (NOIs) to be mailed to the composers of the music being streamed.

After the class action lawsuit was filed against Spotify last year, HFA started sending backdated NOIs on behalf of Rhapsody and that may have been the biggest mistake Rhapsody could have made. The NOIs date as far back as 2005, which looks a lot like Rhapsody admitting it illegally failed to pay mechanical royalties from at least 2005 to 2016. The plaintiffs of the class action lawsuit against Rhapsody, which include David Lowery and several members of his bands, can now point to Rhapsody’s own voluntary change in practices to claim damages for music that was streamed by Rhapsody for eleven years.

When considering the years Rhapsody failed to pay royalties, as well as its millions of paying subscribers, the class action lawsuit could be enough to finish off a company that hasn’t been doing very well lately. With the recent leak of certain financial documents, people have already been wondering if Rhapsody could survive for long even before this lawsuit was filed. The class action may be the final nail in the coffin of this particular streaming company.

Like the lawsuit against Spotify, Lowery and his fellow plaintiffs have filed claims for an estimated $200 million, based on their approximation of the number of unlicensed songs in the company’s catalogue. Unlike the lawsuit against Spotify, the defendant appears to be much less capable of summoning the necessary resources to effectively fight this particular legal battle. Although Spotify has acted quickly to have the lawsuit against them nullified, there is little evidence Rhapsody will be able to do the same, especially in light of their recent apparent admissions.Super Lawyers named Illinois business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin’s Illinois business trial lawyers have over a quarter of century of experience in litigating complex class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Sugar Grove and Plainfield business dispute lawyers handle emergency business law suits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.