Spotify is facing a class action lawsuit from musicians who say the digital music service has not paid royalties due to them. David Lowery — frontman of rock bands Camper Van Beethoven and Cracker, and the musicians' representative — is leading the lawsuit filed in the Central District Court of California in which the artists are demanding at least $150m (£101m).

"The Copyright Act provides statutory penalties to discourage Spotify's infringement, including statutory damages awards of between $750 and $30,000 for each infringed work, and up to $150,000 for a wilful infringement," states court documents filed on 28 December.

The complaint alleges Spotify has unlawfully distributed copyrighted music to more than 75 million users despite failing "to identify and locate the owners of those compositions for payment or to provide them with notice of Spotify's intent to reproduce and/or distribute the works".

Spotify is said to have created a reserve fund of between $17m and $25m to pay royalties on songs whose copyrights have not yet been established. The songs allegedly unlawfully reproduced and distributed by Spotify include Almond Grove, Get On Down the Road, King Of Bakersfield and Tonight I Cross the Border.

The company has said it is working closely with the National Music Publishers Association to pay royalties. Jonathan Prince, Spotify's global head of communications and public policy, in a statement to Billboard, said: "We are committed to paying songwriters and publishers every penny. Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong, or incomplete. When rights holders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities."

"We are working closely with the National Music Publishers Association to find the best way to correctly pay the royalties we have set aside and we are investing in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem for good."