Spotify Sued by Mechanical Licensing Collective Over Bundled Music-Audiobooks Subscription Plans, Which Result in Lower Royalties

variety.com:

Jem Aswad Executive Editor, Music The publishing industry’s offensive against Spotify continues as the Mechanical Licensing Collective has filed legal action against the streaming giant’s U.S.

division over its recent subscription offers that bundle music and audiobooks, resulting in a lower royalty. the MLC seeks “unpaid royalties due under the compulsory mechanical blanket license obtained by Spotify to reproduce and distribute musical works in the United States via its consumer music streaming platform,” according to the announcement.

The lawsuit states that, beginning in March 2024, Spotify announced that its Premium Individual, Duo and Family subscription streaming plans would have an option to be bundled with audiobooks, reducing the royalties that creators will receive, although Spotify asserts that the increased volume of subscriptions would actually increase the amount of money distributed to music creators.

The MLC says the new plans will result in an underpayment of royalties. The lawsuit states: “On March 1, 2024, without advance notice to the MLC, Spotify unilaterally and unlawfully decided to reduce the Service Provider Revenue reported to the MLC for Premium by almost 50 percent, by improperly characterizing the service as a different type of Subscription Offering and underpaying royalties, even though there has been no change to the Premium plan and no corresponding reduction to the revenues that Spotify generates from its tens of millions of Premium subscribers.” “The MLC believes that Spotify’s position does not comply with applicable law and regulations,” the announcement reads, adding that the collective “has statutory authority to address Spotify’s noncompliance with its royalty payment obligations..