No one should be suprised Spotify beat the MLC: Chris Castle

A judge just threw out the MLC’s lawsuit against Spotify over audio bundling royalties, and no one should be surprised, says attorney and artist advocate Chris Castle.

No one should be suprised Spotify beat the MLC

Op-ed CHRIS CASTLE via Music Tech Policy

It should come as a shock to no one that Judge Torres has dismissed the MLC’s lawsuit against Spotify over bundling.  The dismissal granted Spotify’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).  A motion to dismiss under Federal Rule of Civil Procedure Rule 12(b)(6) is a pretrial motion that a defendant can file to request the court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Essentially, the defendant Spotify is arguing that even if all the allegations in the complaint are true, they do not amount to a legal claim that would warrant a remedy from the court.  

Such motions are common and, if granted, result in the case being dismissed with leave to amend, i.e., without prejudice.  I think it’s fair to say that the most common result in 12(b)(6) practice is that the applicable court dismisses with leave to amend especially since these are pretrial motions and the plaintiff has not put on their case.  Plaintiffs actually have to try very hard to get a dismissal with prejudice.  

However, a court may grant the motion with prejudice if it finds that the plaintiff has already had a fair opportunity to amend the complaint but still failed to state a claim upon which relief can be granted to ensure that cases which lack legal merit do not continue to consume judicial resources.  This might happen when the plaintiff is represented by the most sophisticated attorneys in the New York bar (or certainly some of the most expensive) and the smartest people in the music business.  Yet the MLC still failed to state a claim in the Court’s view—which is the view that matters.  The Court determined that Spotify’s bundling of audiobooks with its music streaming service was explicitly permitted under the regulations for Phonorecords IV streaming mechanicals, and therefore, Spotify’s reclassification of its Premium subscription plans as “bundles” was lawful.  

In fact, the Court found that the plain meaning of the streaming mechanical regulations in Phonorecords IV—highly negotiated and litigated by the smart people, or rather dozens of the smart people—led to the obvious conclusion that Spotify did nothing wrong.

So that was another waste of everyone’s time, including the Court’s if I can read between the lines a bit.  Just a bit.  Was it a frivolous claim that might justify sanctions?  We’ll see. Was it a legitimate cost of the mechanical licensing collective covered by the administrative assessment? I doubt it.

“Spotify is not in the music business”

But before anyone starts getting smug, let’s understand another dimension of the entire episode.  Just because Spotify took advantage of an absurdly complicated rule that would make Rube Goldberg weep for mercy doesn’t mean it was right.  Was it a dick move?  Oh yes, very much so.  Did it prove yet again that Spotify is not in the music business and could give a damn about their relationship with songwriters?  Very much so.  Did it prove yet again that Spotify are complete dickwads?  You betcha.  All of them with no exceptions.

Daniel Ek is one of the few people who continually snatches defeat from the jaws of victory.  Stop referring to him as a “partner.”  He’s not.  He doesn’t want to be a partner.  He thinks we are beneath him and that we are stupid to the extent he thinks about songwriters at all.  And you know what?  He’s not wrong. If you are stupid enough to leave a loophole gaping wide open when dealing with a scumbag, whose fault is it if the scumbag behaves like a scumbag?

Was he smart?  Absolutely not.  He was stupid.  But cunning. As we were taught by Deep Throat in All the Presidents Men, these guys are not that smart and things got out of hand.  The question is, will we learn from our mistakes?  My bet is that even a 30% haircut is not going to be enough to make the changes that need to get made.  We’ll see.