LyricFind Sues Rival Musixmatch Over 'Fractional' Monopoly

Music lyric provider LyricFind filed an antitrust lawsuit against its main rival Musixmatch and its private equity parent TPG Global in U.S. District Court in California this week charging them with conspiring illegally to monopolize the market for licensed lyric data and services.

The legal core of the case is comprised of allegations that Musixmatch and TPG have exploited an exclusive licensing deal with Big Three music publisher Warner-Chappell Music to effectively preclude LyricFind and others from securing deals to provide lyric data to music streaming and other service providers. The lawsuit seeks damages that could exceed $1 billion after trebling.

According to the complaint, LyricFind had been negotiating with Spotify, the largest and most important music digital service provider (DSP), for several months to replace Musixmatch as Spotify’s primary lyric data supplier, up to and including starting work on integrating its service with the Spotify platform and performing tests. At the last minute, however, Musixmatch, under the direction of TPG, secured a deal with Warner-Chappell to become the exclusive sublicensor of WCM lyrics. Warner then notified DSPs they could no longer obtain WCM lyrics from providers other than Musixmatch, causing Spotify to cancel its planned agreement with LyricFind.

Spotify, like most major DSPs, sources lyric rights directly from major publishers. As described in the complaint, however, DSPs, including Spotify, rely on services like LyricFind and Musixmatch to convert plain text lyrics into machine readable code, add timing data to sync the lyrics to the audio, and handle other data formatting and delivery services. They also sometimes handle royalty administration chores.

Warner-Chappell, along with along with other Big Three publishers Sony Music Publishing and Universal Music Group, collectively control about 60% of music publishing worldwide. Without access to the Warner-Chappell catalog LyricFind cannot offer a full-service lyric package to DSPs, and leaves DSPs no choice but to pay whatever price Musixmatch demands.

It’s unclear whether LyricFind has, or intends to charge Warner-Chappell with participating in the alleged conspiracy with Musixmatch and TPG. Several sections of the publicly released version of the complaint are redacted, at least some of which appear from context to reference WCM’s role in the scheme. One of the 13 listed causes of action is also redacted.

“At this juncture, our focus is on challenging Musixmatch’s conduct in the market,” is all LyricFind will say for now. Musixmatch called the allegations “meritless.”

Two interesting subtexts that run throughout the complaint could have resonance beyond the immediate case

When it comes to antitrust law, I have but “small Latin and less Greek,” to quote Ben Jonson, out of context. But there are two interesting subtexts that run throughout the complaint that could have resonance beyond the immediate case.

According to complaint, WCM represents about 12% of the publishing business by revenue. But it has a full or partial interest in 30% of all streams licensed on the major platforms. As of November 2024, WCM had at least partial interest in 64 of the top 100 songs on Billboard’s Top Radio Airplay Chart, and 59 of the top 100 songs on Billboard’s Hot 100 Songs Chart.

Many popular songs released these days have half a dozen or more credited songwriters, each of whom may be signed to a different publisher. While they share credit, typically they do not share equally in the royalties that flow from the song. Each contributor is assigned a percentage share determined arbitrarily via a negotiated, sometimes informal, agreement among the parties. As a result, music publishing rights are highly fragmented and not always well-documented.

By long tradition, the industry has followed a practice of fractional licensing under which each percentage share is licensed separately and independently. In order to perform the song or display the lyrics while avoiding potential liability for infringement, therefore, an intended licensee must cobble together 100% of the fragmented rights by securing separate agreements with each and every percentage owner.

That long tradition is nowhere required by the Copyright Act, however. Under copyright law, the co-owners of a song are considered tenants-in-common. Each has an independent right to use or non-exclusively license the entire work provided they account to the other co-owners for any profits that ensue. That last bit can be the rub, however, and why the practice is so uncommon.

“The Copyright Act requires the entity granting the 100% license to administer payments to all the other co-owners, which is both extremely difficult and onerous,” LyricFind CEO Darryl Ballantyne said in an email to RightsTech. “In addition, the Copyright Act only covers the U.S., and we are talking about a worldwide exclusive. So for all intents and purposes, any song even partially owned by Warner-Chappell is going to be affected.”

The practice of fractional licensing has been the focus of controversy at times in the industry. Most notable, in 2017 the Justice Department conducted a review of the antitrust consent decree that had long-governed how BMI, one of the two largest performing rights organizations (PROs) in the U.S., licenses public performance rights to radio stations and venues, and concluded the decree required the PRO to grant “full-work” licenses for the songs it represents rather than only the fraction nominally owned by its member songwriters.

That conclusion was ultimately rejected by the court overseeing the decree, allowing fractional licensing to continue. In this latest case, however, LyricFind is alleging Musixmatch, and by implication Warner-Chappell, are leveraging the practice of fractional licensing to effectuate an anti-competitive monopoly, not merely to follow industry tradition. It cites the example of the Ariana Grande track “7 Rings,” where the inability to license WCM’s 1.2% interest in the hit song prevented LyricFind from including the lyrics in its service.

Whether by design or coincidence, LyricFind’s lawsuit puts the spotlight on the anti-competitive potential inherent in fractional licensing just as the U.S. Copyright Office is kicking off a congressionally requested inquiry into the proliferation of PROs in the U.S. and its potential implications for the complexity of licensing music rights. Over the past 12 years, the number of PROs operating in the U.S. has grown from three to six, further fragmenting public performance rights and increasing the opportunities for exploiting possibly conflicts.

That could cause the issue to flare again within the industry, regardless of the outcome of the LyricFind lawsuit.

A second, albeit less explicit subtext is the complaint’s alluding to the impact of the increasingly financialization of the music business. Since the 2018 debut of the Hipgnosis Songs Fund as a publicly traded company, financial capital has flowed into music rights from investors attracted by the reliable and non-market correlated returns generated by subscription streaming.

While a boon to some in the industry, particularly for publishers and some individual artists, financial investors have different interests and incentives than artists, and even traditional rights owners and aggregators. That’s particularly so in the case of private equity funds like Musixmatch’s owner, TDG Global, which typically have short investment time horizons and tend to impose strict near-term cash flow goals on the assets they acquire.

One way to increase cash flow, of course, is by being able to charge monopoly rents. The complaint’s description of TPG’s goals and strategy would fit that definition, although it doesn’t use the term:

TPG’s and Musixmatch’s goal was simple: make sure that Spotify, and other DSPs, have no choice but to obtain Lyric Data Services and Lyric Rights Licensing from Musixmatch despite its higher fees—a plainly anticompetitive result. LyricFind brings this lawsuit to stop Defendants’ unlawful conduct, which has eliminated competition and raised prices for Lyric Data Services and Lyric Rights Licensing worldwide and in the United States.

The influx of investment capital to the music business, by itself, cannot be blamed for unlawful conduct, to be sure. But it unquestionably changes things.

“At LyricFind, I've said publicly forever that we want to make deals that build long term sustainable business for us and our clients - not just whatever gets us the most money right away to juice the financials,” Ballantyne told me. “We are here, in the office, in the trenches, every day with our team, who are also our friends. We care about everyone around us, and that extends to our clients, partners, and the artists and songwriters we represent. When private equity gets involved, they often make a lot of faceless, nameless budget cuts to optimize profit. And that's true of many other pure play and founder-owned businesses, and not just in the music industry. I think that whenever a company becomes a slave to the markets, their philosophy ends up changing, and often not for the betterment of the staff and partners.”

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