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A music publisher is suing Spotify for $1.6 billion

Efficiency is a big part of running a successful business. Most businesses hire outside of their own walls for certain jobs, and there is a risk anytime another company gets involved in operations. Hiring a third party may free resources for other work, but you are still liable for their actions on your behalf. The contract between businesses is vital.

It’s something that music streaming service Spotify is learning with a recent $1.6 billion lawsuit filed by Wixen Music Publishing. The lawsuit alleges that Spotify shared music it had not secured the rights to, including popular hits by Tom Petty, The Doors, Neil Young and others. The third party at the center of allegations is Harry Fox Agency, who handled transactions for Spotify but, according to Wixen, was “ill-equipped” for the job. Wixen’s lawsuit is indirectly linked to a class action suit against Spotify.

Spotify is looking to go public in 2018 and, as this lawsuit reflects, there are significant monetary sums behind the company. With big money comes a watchful eye.

Business to business contract breach

If, as alleged, Harry Fox Agency did not correctly secure rights, then Spotify will no doubt seek compensation for a breach on contract with them upon resolution of the Wixen suit. Even so, the case damages the brand and reallocates resources better used toward Spotify’s growth, especially as they aim to go public.

To protect your organization, it is essential to fully vet potential business partners, and to draft strict and protective contracts to ensure that services are carried out accurately, ethically and to their full extent. The right legal counsel can help negotiate business disputes to settle breach of conflict and other business-to-business problems.

Efficiency, but at what cost?

Spotify first launched in Sweden in 2008, growing to reach more than 140 million users in less than ten years. Hiring an agency to help secure music rights may have made internal processes more efficient, but they have proven to be additional costs to the arrangement.

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