Following Spotify's successful court dismissal of the Mechanical Licensing Collective (MLC) lawsuit in May 2024, the MLC is considering all available options, including an appeal.

The dispute centers on Spotify's strategy of bundling audiobooks into its Premium subscription plans. This bundling practice has reportedly allowed Spotify to reduce its reported service provider revenue, leading to lower royalty payments. By November 2024, Spotify had reportedly saved an estimated $100 million after moving 98% of its subscribers to bundled options.

The MLC expressed concern about the court's decision, stating: "Spotify's actions are not consistent with the law, and yesterday's decision does not align with the facts and legal principles central to this action."

Wall Street has responded positively to Spotify's legal victory. KeyBanc increased its price target for SPOT stock from $555 to $600, citing strong subscriber growth, revenue performance, and margin momentum. The early renewal of Spotify's UMG deal has further strengthened its position to achieve its 20%+ revenue growth target.

The industry impact extends beyond Spotify, as Amazon has begun following suit by adding audiobooks to its Music Unlimited plan at no extra cost. This trend suggests other Digital Service Providers (DSPs) may adopt similar bundling strategies, potentially leading to reduced royalty payments for publishers and songwriters.

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