Spotify has formally responded to the Mechanical Licensing Collective's (MLC) lawsuit regarding unpaid royalties, defending its audiobook bundling practices and requesting dismissal.

The core dispute centers on Spotify's classification of audiobook offerings as "bundles," which significantly impacts mechanical royalty calculations under Phonorecords IV. This reclassification affects nearly all U.S. subscriptions and could reduce royalty payments by hundreds of millions of dollars through 2027.

Key Arguments from Spotify's Defense:

• Audiobooks have "significant, demonstrable value" as part of Spotify Premium
• Audiobooks qualify as "other products or services" distinct from music streaming
• Book content involves different rights holders and licensing structures
• The timing of bundle implementation and marketing strategies are legally irrelevant
• The availability of standalone music subscriptions meets legal requirements

Financial Impact:

• Publishers are losing over $10 million monthly in U.S. mechanical royalties
• The reclassification affects royalty calculations from March 2024
• The determination remains in effect until late 2027

Current Status:

• Next case management conference scheduled for December 9th
• MLC's response expected by July 26th
• Document requests due August 9th
• Depositions must conclude by November 19th

This case could set a precedent for how streaming services structure their bundled offerings and calculate mechanical royalties, potentially affecting the entire music streaming industry.

Related Articles

Previous Articles