The Mechanical Licensing Collective (MLC) is challenging Spotify's motion to dismiss their unpaid-royalties lawsuit, which centers on the streaming platform's controversial bundling reclassifications in the U.S.

At issue is Spotify's reclassification of individual subscriptions as "bundles" that include both music and audiobooks. This change significantly impacts mechanical royalty payments under the Phonorecords IV determination, potentially saving Spotify approximately $150 million annually in compositional royalties.

The MLC argues that:

• The audiobook component has only "token" value to subscribers
• The packages don't constitute legitimate bundles under Section 115
• Spotify owes millions in unpaid mechanical royalties

Spotify counters that:

• Audiobooks have more than token value
• They represent a distinct product tier
• The bundling classification is legitimate
• The timing of audiobook integration and tier accessibility are irrelevant

In their 30-page opposition to dismissal, the MLC maintains that their arguments are valid and deserve full consideration by the court. They emphasize that at this preliminary stage, the only relevant question is whether the complaint states a plausible claim for relief.

The outcome of this case could have significant implications for music creators, who the MLC describes as "the lifeblood of Spotify's multibillion-dollar business." These changes have already resulted in reported royalty savings of $100 million for Spotify since March 2024.

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