MLC Spotify lawsuit dismissed, bundled royalties unchanged

UPDATED: A judge has dismissed the MLC Spotify lawsuit over mechanical royalties paid to songwriters and music publishers on subscription tiers bundled with audiobooks. The MLC and Spotify respond.

MLC Spotify lawsuit dismissed, bundled royalties unchanged

On Wednesday, Judge Analisa Torres of the US District Court for the Southern District of New York granted Spotify’s motion to dismiss the Mechanical Licensing Collective (MLC) lawsuit.

Judge Torres wrote in her decision that, “the Court finds that [Section 115] and its implementing regulations are unambiguous, and that the only plausible application of the law supports Spotify’s position…. Under the facts as alleged, audiobook streaming is a product or service that is distinct from music streaming and has more than token value. Premium is, therefore, properly categorized as a Bundle, and the allegations of the complaint do not plausibly suggest otherwise.”

Days before the ruling UMG and Spotify announced a deal that included a direct US licensing deal with Universal’s publishing division that sets its own terms related to bundled royalties and circumvents the compulsory licences argued in the case.

MLC Responds

“The MLC brought this action to address the unprecedented steps taken by Spotify to significantly underreport royalties to the MLC. Congress authorised the MLC to take legal actions in situations like this, to enforce the payment obligations of digital services under the compulsory blanket licence that the MLC administers. We continue to be concerned that Spotify’s actions are not consistent with the law, and that today’s decision does not align with the facts and legal principles central to this action”.

Spotify Responds

After the decision, Spotify issued this statement: “We are pleased with this outcome, which demonstrates that, after careful review by the court, Spotify’s Premium service is appropriately categorized as a bundle and offers valuable content alongside music. Bundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry. We know the regulations can be complex, but there’s plenty of room for collaboration—and our recent deal with UMPG shows how direct licenses can create flexibility and additional benefits.”

Read the judge’s full decision here via Reuters.

Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, a Berklee College Of Music professor and the founder of the Skyline Artists Agency