Spotify has filed a motion to dismiss the Mechanical Licensing Collective's (MLC) unpaid-royalties lawsuit, claiming the organization's arguments against its audiobook bundling strategy are "nonsensical and factually unsupportable."

The dispute centers on Spotify's 2024 decision to reclassify its main U.S. subscriptions as bundles after introducing a standalone audiobook tier. This reclassification significantly reduced Spotify's mechanical royalty payments, saving the company approximately $50 million between March and June alone.

The MLC's lawsuit, filed in May, argues that Spotify's packages don't qualify as true bundles because:

• Audiobooks access isn't a "differentiated product"
• The offering doesn't exceed the required "token value" for bundle classification

Spotify's dismissal motion, filed through Latham & Watkins, counters these claims by asserting:

• Audiobook streaming is distinctly different from music streaming
• 15 hours of monthly audiobook access carries more than token value
• Phonorecords IV doesn't require offering standalone audiobook products
• The platform can classify eligible services as bundles at its discretion

The streaming service emphasizes that dismissal is particularly warranted since the MLC's legal fees are funded by streaming services, including Spotify itself. The case highlights ongoing tensions between digital platforms and music rightsholders over mechanical royalty payments under the Phonorecords IV determination, which remains in effect through 2027.

Spotify maintains that no federal court litigation is necessary to confirm that audiobook streaming is distinct from music streaming, making its bundling strategy legitimate under current regulations.

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