Spotify has submitted formal arguments to dismiss a lawsuit filed by the Mechanical Licensing Collective (MLC) regarding unpaid royalties related to audiobook bundling.

The core dispute centers on Spotify's classification of its subscriptions as "bundles" after including audiobook access, which significantly reduces mechanical royalty payments under the Phonorecords IV determination through 2027.

Key Points of Spotify's Defense:

• Audiobooks have "significant, demonstrable value" as part of Spotify Premium
• Books are distinct from music, created by different rights holders and require separate licensing
• The timing between audiobook integration and royalty recalculation is legally irrelevant
• Spotify is not required to market its Audiobook Access product in any particular way

Financial Impact:

• Publishers are losing over $10 million monthly in U.S. mechanical royalties
• Nearly 100% of Spotify's U.S. subscriptions are now classified as bundles
• The changes affect royalty calculations through 2027

Current Status:

• The MLC plans to respond by July 26th
• Document requests are due by August 9th
• Depositions must conclude by November 19th
• Next case management conference scheduled for December 9th

While Spotify has made unbundled audiobook-free subscriptions available, the difficulty in finding these plans and the requirement for manual subscription changes makes a widespread return to unbundled subscriptions unlikely in the near term.

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