A legal battle between Spotify and the Mechanical Licensing Collective (MLC) has escalated into a complex discovery dispute, centered around Spotify's recent reclassification of its subscription packages.

At the heart of the conflict is Spotify's decision to categorize its main subscription packages as "bundles" after adding audiobook features, resulting in significantly lower mechanical royalty payments in the U.S. The MLC contests this classification, arguing that these packages don't qualify as true bundles under the Phonorecords IV determination.

Key Points of Dispute:

• The MLC seeks documents regarding:

  • Spotify's decision-making process for audiobook integration
  • Revenue, subscriber numbers, and profit data for audiobook tiers
  • Technical architecture of the platforms

• Spotify's position:

  • Agreed to 53 of 60+ document requests
  • Claims requests are "extremely broad" and "invasive"
  • Seeks internal communications between MLC, music publishers, and NMPA

Current Status:

• Both parties met via Zoom on September 18th
• Failed to reach a compromise on discovery scope
• Court intervention has been requested
• Settlement appears unlikely in the near term
• Spotify continues to pursue case dismissal

The outcome of this dispute could significantly impact how streaming services structure their offerings and calculate royalty payments in the future.

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