Spotify’s latest acquisition might help fix its royalty problem

Spotify announced today that it has purchased Loudr, a San Francisco-based company whose services, according to Spotify, "make it easy for content creators, aggregators and digital music services to identify, track and pay royalties to music publishers." Loudr describes its technology as "big data for music rights" and it uses algorithms to connect sound recordings to compositions. For music publishers, it can match their catalog to usage and make sure they're getting the proper amount of royalties.

This is a useful acquisition for Spotify which has struggled with licensing and adequate payments in the past. Currently, the company faces a $1.6 billion lawsuit filed by Wixen Music Publishing. In 2016, Spotify struck an agreement with the National Music Publishers Association to pay $21 million for previously unpaid royalties. And last July, Spotify was hit with two lawsuits over royalty disputes after settling a class action suit for $43.5 million in May.

Spotify has tried to do better when it comes to accurately tracking and paying royalties. It acquired Mediachain for that purpose last year, a company that manages music ownership information through a blockchain-secured database. It also began limiting its free streaming option.

Spotify said the Loudr team will join its New York offices. "What Loudr has built is more than just a smart and easy way for artists to obtain mechanical licenses; it's true music industry innovation," Adam Parness, Spotify's global head of publishing, said in a statement.