Spotify wins ‘bundling’ lawsuit over controversy that lowered artist payments

nme.com:

Spotify has won a lawsuit over a bundling strategy it adopted which led to decreased royalty payments to songwriters.It comes after the streaming company introduced a new audiobooks bundle to its premium subscription last year.Spotify started to pay a lesser royalty rate to songwriters, and argued that the move was backed by a settlement they had reached with music publishers in 2022 through the Copyright Royalty Board, which determined streaming services are allowed to pay less on music subscriptions bundled with other services.The Mechanical Licensing Collective, a nonprofit organisation responsible for issuing mechanical licences to streaming services, filed a lawsuit against Spotify last May, claiming that it had incorrectly characterised the bundle and “unilaterally and unlawfully” began reducing the rate by as much as 50 percent without any warning, according to Rolling Stone.In a memorandum filed in court yesterday (January 29), it was ruled that Spotify was within its rights, calling the bundling rule “unambiguous.”Judge Analisa Torres added: “The only plausible application of the law supports Spotify’s position.

Under the facts as alleged, audiobook streaming is a product or service that is distinct from music streaming and has more than token value.

Premium is, therefore, properly categorised as a bundle, and the allegations of the complaint do not plausibly suggest otherwise.”Following the ruling the MLC issued a statement (via Rolling Stone).It said: “The MLC brought this action to address the unprecedented steps taken by Spotify to significantly underreport royalties to The MLC.

We continue to be concerned that Spotify’s actions are not consistent with the law, and that today’s decision does not align with.