Spotify has filed a motion to dismiss the Mechanical Licensing Collective's (MLC) unpaid-royalties lawsuit, claiming the organization's arguments against its audiobook bundling strategy are "nonsensical and factually unsupportable."

The dispute centers on Spotify's 2024 decision to reclassify its main U.S. subscriptions as bundles after introducing a standalone audiobook tier. This reclassification significantly reduced Spotify's mechanical royalty payments, saving the company approximately $50 million between March and June alone.

The MLC argues that Spotify's packages don't qualify as true bundles because:

• Audiobooks access isn't a "differentiated product"
• The offering doesn't exceed the required "token value" for bundle classification

Spotify's dismissal motion, filed through Latham & Watkins, counters these claims by asserting:

• Audiobook streaming is clearly distinct from music streaming
• 15 hours of monthly audiobook access carries more than token value
• Phonorecords IV doesn't require offering standalone audiobook products
• The timing of bundle classification is irrelevant to its legitimacy

Spotify emphasizes that dismissal is particularly warranted since the MLC's legal fees are funded by streaming services, including Spotify itself. The platform maintains that the central question - whether audiobook streaming is distinct from music streaming and offers greater than token value - has an "indisputable" answer requiring no federal court intervention.

The case highlights ongoing tensions between digital streaming platforms and rights holders over mechanical royalty payments under the Phonorecords IV determination, which governs rates through 2027.

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