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Spotify Buys Loudr to make sure artists get paid.

The music distribution giant acquired the cover song licensing firm to tackle copyright risks

Spotify -the streaming music giant, facing copyright infringement accusations, gets a better way to track what songs it’s playing so it doesn’t shortchange music publishers.

Spotify, the world’s largest music streaming service, said on Thursday it is to buy Loudr.fm, a San Francisco-based provider of licencing technology to help it to locate songwriters and pay them royalties they are due.

The acquisition helps address a major weakness Spotify has warned exists in its business model, namely locating and ensuring the right artists get paid for their copyrighted work, an issue which, left unaddressed, leaves it open to lawsuits.

 “Foster a more open, streamlined and modern music publishing landscape.” Specifically, Loudr’s team will contribute to Spotify’s continued efforts towards a more transparent and efficient music publishing industry for songwriters and rights holders.”

Financial terms of the deal, the first since it began trading on the New York Stock Exchange earlier this month, were not disclosed.

Spotify was hit late last year with a lawsuit seeking damages of up to $1.6 billion by Wixen Publishing, a California-based company that represents artists including Tom Petty, Neil Young, Rage Against the Machine and Missy Elliott.

Loudr was set up in 2013 by its three co-founders to simplify the process for musicians who publicly perform songs by other artists to identify, track and pay royalties for so-called “mechanical licences” owed to music publishers. These may include cover versions of songs, samples, remixes or medleys.

The company offers a system for automatically acquiring mechanical licences under US copyright laws, which do not require musicians to engage in up-front licencing negotiations before performing songs by other artists. Charges for licences range from $35 for electronic filings to $85 for paper ones.

Loudr will relocate to Spotify’s offices in New York, the company said in a blog post.

Spotify has made at least ten modest, typically technology-focused acquisitions in recent years to improve its service.

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