A non-profit organization, the Mechanical Licensing Collective, has filed a lawsuit against Spotify, calling the way the streamer reclassified its premium, duo and family plans as “bundles” and started paying a discounted royalty rate to publishers and songwriters “improper.”
The update about the lawsuit is coming just a week after Billboard published its estimate that publishers and songwriters will earn about $150 million less in U.S. mechanicals in the next year, compared to what they would have been owed had the services not been bundled.
MLC said “The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for Songwriters and Music Publishers.
“If unchecked, the impact on Songwriters and Music Publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
According to MLC, Spotify reclassified its Premium Individual, Duo and Family subscription streaming plans as Bundled Subscription Offerings because they now include audiobooks.
Royalties paid on bundled services are significantly less.
MLC said Premium subscribers already had access to audiobooks and “nothing has been bundled with it.”
In a statement, Spotify said the lawsuit “concerns terms that publishers and streaming services agreed to and celebrated years ago.”
Spotify said it paid a “record amount” in royalties last year and “is on track to pay out an even larger amount in 2024.”
“We look forward to a swift resolution of this matter,” the Swedish company said.
In February, Spotify said it paid $9 billion to musicians and publishers last year, about half of which went to independent artists.
