The Mechanical Licensing Collective (MLC) has filed a lawsuit against Spotify USA in the Southern District of New York, alleging underpaid publishing royalties due to the streaming platform's bundling practices. Here's a comprehensive breakdown of the situation:

Key Points of the Lawsuit:

• The MLC claims Spotify is illegally reducing royalty payments by classifying its Premium Individual, Duo, and Family plans as bundled subscriptions with audiobook access
• This classification allegedly reduces the reported service provider revenue for music, resulting in lower royalty payments
• The lawsuit seeks corrected reporting and unpaid royalties from March 2024 onwards

Spotify's Response:

• Spotify maintains that bundling discounts were included in the Phonorecords IV agreement, which was previously approved by publishers
• The company reports record publisher and society payments in 2023, with projected increases for 2024
• Other major platforms like Apple and Amazon also utilize bundling strategies

Industry Context:

• Major labels have remained quiet on the bundling issue, with executives generally supporting Spotify's strategies
• Publishers are fighting this battle independently, despite often being subsidiaries of major label groups
• The MLC has distributed over $2 billion to songwriters and publishers since January 2021

The case highlights the complex relationship between streaming platforms, publishers, and the broader music industry, with significant implications for future royalty payments and bundling practices.

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