Spotify has issued a strong response to the Mechanical Licensing Collective's (MLC) lawsuit regarding alleged underpayment of publishing royalties. The streaming giant maintains that its bundling practices are completely legitimate and were previously agreed upon by all parties involved.

Key Points of Spotify's Response:

• The bundling terms were explicitly included in the Phonorecords IV agreement, which publishers and streaming services jointly approved
• Multiple Digital Service Providers (DSPs) utilize bundles in their subscription offerings
• Spotify reported record publisher and society payments in 2023, with projected increases for 2024

The MLC's Allegations:

• Spotify incorrectly classified Premium Individual, Duo, and Family plans as bundled subscriptions by including audiobook access
• This classification allegedly reduces reported service provider revenue for music
• The practice results in lower royalty payments to rights holders

Industry Context:

• Major labels have remained quiet on the bundling issue
• Label executives, including UMG's Lucian Grainge and WMG's Robert Kyncl, support Spotify's bundling strategies
• Publishers are fighting this battle independently, despite often being subsidiaries of major label groups
• The streaming industry continues to show strong growth, with major labels posting double-digit quarterly revenue gains

The MLC's Role:

• Created by Congressional mandate in 2018
• Designated by the Register of Copyrights
• Responsible for collecting and distributing blanket mechanical license royalties
• Has distributed over $2 billion to songwriters and publishers since January 2021

The lawsuit seeks corrected reporting and unpaid royalties from March 2024 onwards, along with future compliance. Spotify has expressed its desire for a swift resolution to the matter, though specific next steps remain unclear.

Related Articles

Previous Articles