Spotify has revealed it saved $49.89 million (€46 million) in mechanical royalties between March and June 2023 through its controversial bundling reclassification strategy. This disclosure came in a recent regulatory filing, following the company's report of $290 million in Q2 operating income.

The streaming giant reclassified nearly all its U.S. accounts as bundles in March 2023, citing the combination of music and audiobook offerings. This move has sparked legal action from the Mechanical Licensing Collective (MLC), which is suing for unpaid royalties.

The $49.89 million figure represents the amount Spotify would need to pay if the MLC wins its case, excluding interest and penalties. This monthly savings aligns with initial industry estimates and provides context to the ongoing dispute between publishers and Spotify.

While Spotify strongly defends its position, several key factors influence the situation:

• Major labels are unlikely to pull their catalogs from Spotify, unlike Universal Music's temporary withdrawal from TikTok
• Publishing and recording interests often overlap under major labels' corporate structure
• Universal Music's recent 23% stock price decline, attributed to slowing streaming growth, affects the power dynamic
• Spotify's position allows it to challenge music publishers without significant risk to its core business or expansion plans

Despite the tension, a settlement remains possible, as previous industry legal battles have shown. However, Spotify's strong financial position and the complex relationships between industry stakeholders suggest the company faces limited immediate consequences from this strategy.

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