The Mechanical Licensing Collective (MLC) has initiated legal action against Spotify over alleged underpaid royalties, specifically targeting the streaming giant's bundling practices.

The lawsuit, filed in the United States District Court for the Southern District of New York, centers on Spotify's March 2024 decision to classify its Premium Individual, Duo, and Family subscription plans as bundled offerings due to included audiobook access. This classification reduces the service provider revenue reported, resulting in lower royalty payments.

Key Points of Contention:

• The MLC argues Spotify's bundled plans don't comply with applicable laws and regulations
• The organization seeks corrected usage reporting and unpaid royalties dating back to March 2024
• MLC CEO Kris Ahrend emphasizes their statutory mandate to collect and distribute blanket license royalties

The MLC's Track Record:

• Distributed over $2 billion in royalties since January 2021
• Provides services at no cost to songwriters and music publishers
• Holds exclusive statutory authority to enforce royalty payment obligations

Recent Developments:

• Spotify has reported $100 million in royalty savings since implementing bundled offerings
• The dispute continues to escalate within the music industry
• The case number is 1:24-cv-03809

The outcome of this lawsuit could set a significant precedent for how streaming services structure their subscription bundles and calculate royalty payments in the future.

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