On a normal day, a typical conversation about Spotify might be centered on a debate over what kind of oddball would create a playlist with a metal song by the Deftones next to a modern classical piece by Philip Glass. But Spotify executives are probably hoping you won’t notice the latest song they’re singing: an unusually restrictive, and secretive, fine print contract that imposes a gag order on Spotify customers.
Like most companies, Spotify has long had a fine print contract that says if it cheats a customer or breaks the law, the customer can’t sue in court, but has to go to a private arbitrator (picked by a company picked by Spotify) who will decide the case. As if that wasn’t already draconian enough, however, Spotify also recently added a new secrecy provision to its fine print terms. The legal jargon they’re using to ensure no one ever hears about your dispute with them, after the jump:
"All documents and information disclosed in the course of the arbitration shall be kept strictly confidential by the recipient and shall not be used by the recipient for any purpose other than for purposes of the arbitration or the enforcement of arbitrator’s decision and award and shall not be disclosed except in confidence to persons who have a need to know for such purposes or as required by applicable law. Except as required to enforce the arbitrator’s decision and award, neither you nor Spotify shall make any public announcement or public comment or originate any publicity concerning the arbitration, including, but not limited to, the fact that the parties are in dispute, the existence of the arbitration, or any decision or award of the arbitrator."
If you were putting together a Spotify playlist to accompany this new clause, Queens of the Stone Age’s “The Lost Art of Keeping a Secret” might be one option. But an even better selection might be the 10,000 Maniacs’ “What’s the Matter Here?”
What, exactly, is Spotify trying to hide? Why has the company decided it’s not enough just to force legal disputes out of court, but that is has to ensure all documents related to any wrongdoing must remain secret? Under this shocking new fine print language, Spotify will now ban its customers from even telling their friends or neighbors, or the public, if they have a legal dispute with Spotify. In fact, they can’t even talk about “the existence of the arbitration” itself.
This level of secrecy is bizarre even by the standards of corporate America. If Spotify does something illegal, no one can ever know that a consumer is challenging it. And then, if an arbitrator did find that Spotify acted illegally (which is asking a lot, since Spotify will pick the private arbitration company that will, in turn, select the arbitrator to hear the case), whatever the result is must be kept secret.
Spotify’s timing couldn’t be worse. Large corporations are trying to keep big secrets from their consumers and the public. Volkswagen, for example, has been exposed for having rigged their cars to pass emissions tests, and then, shortly afterward, begin polluting at up to 40 times (!?) the amount allowable by law. And there’s a case right now in Pennsylvania federal courts, involving a software company that installed malware permitting the guys at the company to turn on a customer’s computer, activate their camera, and watch people in the presumed privacy of their own homes.
Now, I’m not suggesting that people at Spotify are trying to spy on people in their homes while they’re dancing in their underwear, but what the hell are they trying to hide with this Orwellian fine print?
As a lawyer, I’ve challenged a couple of these kinds of secrecy provisions before, and had success in getting courts to recognize that they are so unfair as to be unconscionable. In a 2012 case in the Kentucky Supreme Court, Schnuerle v. Insight Communications, the court struck down a secrecy provision as unconscionable because it was “wholly one-sided, protecting only the company that prepared the contract with no reciprocal benefit to the consumers.”
The Court cited a federal court in California (in another case I argued, by coincidence), which explained that corporations benefit from secrecy around arbitration because they know from their experiences which arbitrators are friendly to them and which aren’t, but consumers who can’t share information will never have a way to learn this kind of thing. The court said that if a “company succeeds in imposing a gag order, plaintiffs are unable to mitigate the advantages inherent in being a repeat player.” (Quoting from Ting v. AT&T Corp., 319 F.3d 1126, 1152 (9th Cir. 2003). So, in short: Corporations are regular customers of arbitrators, giving them an unfair advantage over the consumers who are challenging their misconduct.
So, as Tom Waits might ask, “What’s He Building in There?” Under these new terms, Spotify might never have to tell.
In general, I think Spotify is a pretty cool company. But its gag order is pretty creepy. Their provision is ugly, anti-consumer, and probably illegal. Consumers need to call them out, and demand that Spotify change its tune.