A federal judge has granted Spotify's request to extend its response deadline to July 19th in the lawsuit filed by the Mechanical Licensing Collective (MLC) over alleged royalty underpayments related to bundling practices.

Spotify's legal team indicated the extension would allow time for both parties to communicate and potentially narrow the scope of issues. During this 50-day period, the disputed mechanical royalties calculation changes, implemented in March, will continue without an injunction. Industry estimates suggest the royalty reduction could reach $150 million annually, or approximately $12.5 million monthly.

Spotify maintains its position defending the bundle-based approach, citing support from the National Music Publishers' Association (NMPA) for the Phonorecords IV determination. This agreement, effective through 2027, specifically addresses the treatment of bundled products and services including music streaming.

The dispute has drawn attention from major industry players, with Sony Music Publishing stating it was "considering all options" against Spotify. However, given Sony Music Entertainment's significant streaming revenue, a broader industry confrontation seems unlikely.

The outcome of this legal battle could have significant implications for streaming platforms' bundling strategies and royalty calculations moving forward. The industry awaits Spotify's formal response to the MLC complaint, which will provide crucial insights into the company's legal strategy and potential industry-wide impacts.

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