The Mechanical Licensing Collective (MLC) is considering all available options, including an appeal, following Spotify's court victory in their bundling dispute. The organization expressed concerns about the court's May 2024 decision, stating it "does not align with the facts and legal principles central to this action."

At the core of the dispute is Spotify's strategy of bundling audiobooks into its Premium subscription plans. This bundling has led to reduced service provider revenue reporting and subsequent royalty underpayments. Reports indicate Spotify has saved an estimated $100 million since moving 98% of its subscribers to bundled options.

The court's dismissal has positively impacted Spotify's market position, with KeyBanc raising its price target from $555 to $600, citing strong subscriber growth and margin momentum. The recent early renewal of Spotify's UMG deal has further strengthened its position to achieve its 20%+ revenue growth target.

The industry implications are significant as other services follow suit. Amazon has already added audiobooks to its Music Unlimited plan at no extra cost, suggesting a broader industry shift toward bundled offerings. This trend could result in substantial cost savings for Digital Service Providers (DSPs) while potentially reducing revenues for publishers and songwriters.

Under the Phonorecords IV determination, bundled revenue receives different treatment than music-only plans, with 99% of Spotify's U.S. subscriptions now classified as bundled. This shift represents a significant change in how streaming services structure their offerings and calculate royalty payments.

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