The Mechanical Licensing Collective (MLC) is considering all available options, including an appeal, following the court's decision to dismiss their lawsuit against Spotify in May 2024.

The dispute centers on Spotify's bundling of audiobooks into its Premium subscription plans. The MLC argues that this bundling strategy has led to significant underpayment of royalties, as it allows Spotify to report reduced service provider revenue under current rate formulas.

"We continue to be concerned that Spotify's actions are not consistent with the law, and that yesterday's decision does not align with the facts and legal principles central to this action," stated the MLC representatives.

Key impacts of the bundling strategy:

• An estimated $100 million in savings for Spotify since implementing the bundled option
• 99% of Spotify's U.S. subscriptions now classified as 'bundled'
• Other streaming services, like Amazon, are following suit by adding audiobooks to their music plans

Following the court victory, Wall Street has responded positively, with KeyBanc raising Spotify's price target to $600 from $555, citing strong subscriber growth and margin momentum.

The outcome of this case could set a precedent for the music streaming industry, potentially affecting how digital service providers structure their subscription plans and compensate publishers and songwriters.

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