Sony Music Publishing is considering legal action against Spotify following recent changes to the platform's royalty payment structure and bundling practices.

The conflict arose after Spotify added audiobooks to its premium subscription tier and reclassified its subscription product as a bundle. This change resulted in approximately 20% lower mechanical royalty payments to songwriters, beginning March 2024. The reduction currently only affects U.S. royalties.

Sony Music Publishing CEO Jon Platt stated they disagree with Spotify's position, arguing that while the Copyright Royalty Board (CRB) rate structure allows for discounted bundle rates in certain circumstances, this offering doesn't meet the agreed parameters.

Key developments in the dispute:

• The Mechanical Licensing Collective (MLC) has filed a lawsuit against Spotify in Federal Court in New York City
• The National Music Publishers' Association (NMPA) sent Spotify a notice regarding unlicensed videos, lyrics, and podcasts
• Sony Music Publishing is working with NMPA to enforce rates achieved in CRB Phono IV

Spotify maintains that their actions align with the 'Phonorecords IV' agreement, which includes bundling provisions. However, publishers face limitations in their response options, as statutory and compulsory licensing rules may prevent unilateral content removal.

The dispute extends beyond mechanical royalties to include concerns about music usage in podcasts and videos, which require direct authorization and fall outside statutory law.

Industry observers are now watching closely to see if publishers will pursue more aggressive measures, though their options may be limited by ongoing legal proceedings and existing agreements.

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