Sony Music Publishing is threatening action against Spotify over reduced royalty payments following Spotify's subscription bundle changes. The dispute centers on Spotify's reclassification of its premium subscription tier after adding audiobooks, which resulted in approximately 20% lower mechanical royalty payments to songwriters.

Sony Music Publishing CEO Jon Platt explicitly disagreed with Spotify's position in a letter to songwriters and composers. While the Copyright Royalty Board (CRB) rate structure allows for discounted bundle rates in certain circumstances, Sony argues this offering doesn't meet the agreed parameters from the CRB Phono IV proceeding.

Key developments in the dispute:

• The Mechanical Licensing Collective (MLC) filed a lawsuit in Federal Court in New York City
• The National Music Publishers' Association (NMPA) sent Spotify a notice regarding unlicensed videos, lyrics, and podcasts
• Sony Music Publishing is working with NMPA to enforce improved rates from CRB Phono IV
• The royalty reduction currently only impacts U.S. market payments

Spotify maintains that its actions align with the Phonorecords IV agreement, which includes bundling provisions. However, publishers face limitations in potential responses, as statutory and compulsory licensing rules may prevent unilateral content removal.

Additional concerns involve music usage in podcasts and videos, which fall outside statutory law and require direct authorization to prevent infringement.

The dispute continues to escalate, with both sides maintaining their positions while legal proceedings move forward in federal court.

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