Spotify has been hit with a $1.6bn copyright lawsuit for allegedly using thousands of songs without a licence and compensation to music publisher Wixen.

Wixen Music alleges that Spotify failed to get a direct or a compulsory licence to reproduce and distribute songs that Wixen is an exclusive licencee of, including music by Neil Young, Tom Petty and The Doors.

Songs owned exclusively by Wixen include “Free Fallin” by Tom Petty, “Light My Fire” by the Doors, (Girl We Got a) Good Thing by Weezer and works of singers such as Stevie Nicks.

Wixen have filed a lawsuit in a California federal court and is seeking damages worth at least $1.6 billion along with injunctive relief.

"Prior to launch, Spotify struck deals with major record labels to obtain the necessary rights to the sound recording copyrights in the songs by offering the major labels, in many cases, equity stake in Spotify," Wixen said in its lawsuit. "But Spotify failed to properly obtain the equivalent rights for the compositions.

"As a result, Spotify has built a billion dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licences," Wixen continued.

Wixen also alleged that Spotify outsourced its work to a third party, licensing and royalty services provider the Harry Fox Agency, which was “ill-equipped to obtain all the necessary mechanical licences”.

Spotify declined to comment.

Last May, the Sweden-based music streaming service agreed to pay more than $43 million to settle a proposed class action alleging it failed to pay royalties for some of the songs it makes available to users. According to Reuters, Spotify, which is planning a stock market listing this year, has grown around 20 percent in value to at least $19 billion in the past few months.