Spotify Granted Court Extension to Respond to MLC Royalties Lawsuit, New Deadline July 19th
A federal judge has granted Spotify's request to extend its response deadline to July 19th in the Mechanical Licensing Collective (MLC) lawsuit over alleged royalty underpayments related to bundling.
Spotify logo in black
Spotify's legal team requested the extension to allow time for correspondence between parties and potentially narrow the disputed issues. During this 50-day extension period, the alleged mechanical royalties underpayment, estimated at $12.5 million monthly or potentially $20 million until the new deadline, will continue without injunction.
The streaming service has firmly defended its bundling practices, citing support from the National Music Publishers' Association (NMPA) for the Phonorecords IV determination. This agreement, effective through 2027, specifically addresses the treatment of bundled products and services including music streaming.
The dispute gained additional attention when Sony Music Publishing indicated it was "considering all options" against Spotify. However, industry experts consider a broader confrontation unlikely, given Sony Music Entertainment's significant streaming revenue dependence.
Key points of the dispute:
- MLC sued Spotify over royalty calculations related to bundle offerings
- Calculation changes reportedly began in March
- Annual underpayment estimates approach $150 million
- Phonorecords IV determination allows for bundle classification
- Current response deadline set for July 19th
Daniel Ek, CEO of Spotify
The case's outcome could significantly impact streaming platforms' bundling strategies and royalty calculations moving forward, making it a crucial development for the music industry to monitor.
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