Spotify is defending against a lawsuit from the Mechanical Licensing Collective (MLC) regarding its audiobook bundling practices and their impact on mechanical royalties calculations.

Key Points of the Dispute:

• The MLC alleges Spotify's audiobook "bundles" don't qualify as multi-package offerings
• Nearly 100% of Spotify's U.S. subscriptions are now classified as bundles
• This classification could reduce mechanical royalty payments by hundreds of millions through 2027
• Publishers are already losing over $10 million monthly in U.S. mechanical royalties

Spotify's Defense Arguments:

1. Audiobooks have significant, demonstrable market value

2. Books and audiobooks are distinct from music content:

   • Created by different rights holders
   • Licensed separately
   • Subject to separate fees

3. The timing between audiobook integration and bundle reclassification is legally irrelevant

4. Spotify isn't required to market its Audiobook Access product in any particular way

Current Status:

• The judge has set key deadlines:
  • Document requests due August 9th
  • Depositions to conclude by November 19th
  • Next case management conference scheduled for December 9th
• The MLC will respond to Spotify's arguments around July 26th

The outcome of this case could significantly impact how streaming services structure their bundled offerings and calculate mechanical royalties in the future.

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