Spotify has issued a strong response to the Mechanical Licensing Collective's (MLC) lawsuit regarding alleged underpaid publishing royalties. The dispute centers on how Spotify bundles its music, audiobook, and podcast offerings, and the impact on royalty calculations.

Key Points of the Dispute:

• The MLC filed a lawsuit in the U.S. District Court for the Southern District of New York, claiming Spotify is improperly reducing royalty payments through its bundling practices
• Spotify argues that bundling discounts were explicitly included in the Phonorecords IV agreement, which publishers previously agreed to and celebrated
• The streaming platform reports record publisher and society payments in 2023, with projected increases for 2024

Specific Allegations:

• The MLC claims Spotify incorrectly classifies Premium Individual, Duo, and Family plans as bundled subscriptions by including audiobook access
• This classification allegedly reduces reported service provider revenue for music, resulting in lower royalty payments
• The lawsuit seeks corrected reporting and unpaid royalties from March 2024 onwards

Industry Context:

• Other major platforms like Apple and Amazon also use bundling strategies
• Major record labels have remained quiet on the bundling issue, with some executives supporting Spotify's approach
• Publishers are fighting this battle independently, despite often being subsidiaries of major label groups

The MLC, established by Congress in 2018, has distributed over $2 billion to songwriters and music publishers since January 2021. Spotify seeks a swift resolution to the matter, though specific next steps remain unclear.

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