The legal battle between LyricFind and its rival lyrics aggregator, Musixmatch, now has a geopolitical edge.
That’s according to recent court documents seen by MBW.
An amended legal complaint from LyricFind, filed in California on October 24 (read it here), once again confirms that TPG – having acquired a controlling stake in Musixmatch in July 2022 – then considered purchasing LyricFind as well.
According to the complaint, TPG and LyricFind entered into a non-disclosure agreement to explore the acquisition of LyricFind on January 12, 2023.
TPG allegedly gained access to LyricFind’s confidential business information during this due diligence process.
However, the amended complaint confirms that the TPG/LyricFind acquisition negotiations collapsed eleven months later, in December 2023.
Why? That’s a matter of debate.
LyricFind’s complaint alleges that TPG and Musixmatch “wrongfully leaked” confidential information about its firm to Spotify in January 2024 – a month after sale talks stalled.
Specifically, it alleges that TPG “falsely” informed Spotify that LyricFind had “purportedly violated international sanctions related to Russia and purportedly concealed its business dealings from regulators”.
LyricFind states these allegations were “not only a clear breach of [a mutually signed] NDA” but also “grossly and knowingly misrepresent[ed]” information “to try to harm LyricFind’s competitive position”.
The Russia connection
The Russia-related allegation at the center of the dispute could relate to VKontakte (VK), the largest social media provider in Eastern Europe.
According to a purported press comment from a VK spokesperson in January 2023, a new lyrics feature on VK Music and other VKontakte services required rightsholders to submit their lyrics to LyricFind.
At that time, LyricFind was named as “the service that provides the lyrics” to VK.
When asked by MBW about the amended complaint and LyricFind’s historical links to VK, a company spokesperson said: “As we allege in our amended complaint, TPG did try to acquire LyricFind in 2023. When that failed, TPG leaked false information about LyricFind.”
The spokesperson confirmed: “Although LyricFind was a lyric provider for VK, it has not been for years.”
“Although LyricFind was a lyric provider for VK, it has not been for years.”
LyricFind spokesperson
Following Russia’s invasion of Ukraine in 2022, VK’s CEO, Vladimir Kiriyenko, was sanctioned by multiple governments in regions including the US, Canada, the UK, and the EU.
Due to the international sanctions, Apple removed VK’s apps from the App Store globally in September 2022
In the same year, in opposition to Russia’s Ukraine invasion, the three major music companies pulled their operations and releases from the market.
Responding to LyricFind’s suggestion that TPG/MusixMatch leaked confidential information obtained during the due diligence process, a MusixMatch spokesperson said: “This vague and meritless claim is unfortunately LyricFind’s latest desperate attempt to distract from their ineptitude.”
“It’s disappointing but not surprising that Lyricfind would claim a ‘breach’ of an NDA in reference to publicly available information simply because they are embarrassed.”
Musixmatch spokesperson
The Musixmatch spokesperson added: “It’s disappointing but not surprising that they would claim a ‘breach’ of an NDA in reference to publicly available information simply because they are embarrassed.”
The Warner Chappell exclusive dispute
The amended complaint alleges that after the “leaked” information failed to derail LyricFind’s licensing negotiations with Spotify, TPG/Musixmatch executed an “unprecedented” exclusive agreement with Warner Chappell Music.
This exclusive pact apparently granted Musixmatch sole rights to both provide lyric data services and sublicense lyric rights for WCM’s entire catalog to digital services.
LyricFind’s complaint suggests that the exclusive deal between Musixmatch and Warner Chappell was signed on or around March 20, 2024.
At the same time, LyricFind claims it was in the “final stages” of negotiations with Spotify to replace Musixmatch as the streaming giant’s lyrics provider “at a significant discount”.
On what the filing calls “the eve of Spotify’s renewal deadline with Musixmatch”, WCM purportedly informed Spotify of its new exclusive arrangement with Musixmatch.
The result, according to LyricFind: Spotify renewed with Musixmatch “at substantially higher” fees than those offered by LyricFind.
Musixmatch has vigorously disputed multiple of LyricFind’s allegations of anti-competitive behavior RE: its Warner Chappell deal and the impact on Spotify licensing.
In court filings this summer, Musixmatch called LyricFind’s lawsuit “meritless” and a “textbook example of a disappointed competitor seeking to use the courts to achieve what it could not in the marketplace.”
In a statement to MBW earlier this year, a Musixmatch spokesperson asserted that LyricFind sued because “it failed to secure rights and win a contract” with Warner Chappell.
“LyricFind is relying on bluster to distract from its business failures,” the Musixmatch spokesperson said. “Rights owners and digital service providers have a choice about whom they do business with and we’re proud that our partners continue to choose us.”
Musixmatch has also argued that Warner Chappell, as owner of the lyrics, “indisputably has the right to exclusively license and distribute its intellectual property as it sees fit.”
LyricFind’s amended filing further alleges that iHeartRadio ended renewal negotiations with LyricFind upon learning it could no longer service WCM’s lyrics catalog, subsequently signing with Musixmatch “at a price over five times higher than what LyricFind had previously charged”.
LyricFind now estimates its damages in the case exceed USD $1 billion post-trebling.
The company also claims it paid “tens-of-thousands of dollars in outside legal fees” investigating the alleged NDA breach, plus substantial employee time diverted from revenue-generating activities.
The case moves forward following Judge Jacqueline Scott Corley’s September 3 ruling that allowed most of LyricFind’s antitrust claims to proceed.
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