Spotify has filed a motion to dismiss the Mechanical Licensing Collective's (MLC) unpaid-royalties lawsuit, calling the organization's legal arguments "nonsensical and factually unsupportable."

The dispute centers on Spotify's decision to reclassify its main U.S. subscriptions as bundles in early 2024, following the introduction of a standalone audiobook tier. This reclassification significantly reduced Spotify's mechanical royalty payments, saving the company approximately $50 million between March and June alone.

The MLC's lawsuit, filed in May, argues that Spotify's packages don't qualify as legitimate bundles because:

• Audiobooks access isn't a "differentiated product"
• The offering doesn't exceed the required "token value" for bundle classification

Spotify's dismissal motion, filed through Latham & Watkins, counters these claims by asserting:

• Audiobook streaming is distinctly different from music streaming
• 15 hours of monthly audiobook access carries more than token value
• Phonorecords IV doesn't require offering standalone audiobook products to qualify for bundle status
• The timing of audiobook integration (November 2023) versus bundle classification (2024) is irrelevant

Notably, Spotify emphasizes that dismissal with prejudice is particularly warranted since the MLC's legal expenses are funded by streaming services, including Spotify itself.

The case continues to highlight the ongoing tension between digital streaming platforms and music rightsholders over mechanical royalty payments under the Phonorecords IV determination, which remains in effect through 2027.

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