The Mechanical Licensing Collective has lost its legal case against Spotify over lower royalty rates for bundling.
The legal claim was filed last May in the United States District Court for the Southern District of New York. The action by the MLC sought recovery of what it claimed were unpaid royalties for songwriters and publishers due under the compulsory mechanical blanket licence obtained by Spotify for the US.
The case related to Spotify’s assertion that its Premium Individual, Duo and Family subscription streaming plans were re-classed as bundles in the US because those plans had been updated to include access to audiobooks.
Judge Analisa Torres today (January 29) granted Spotify’s motion to dismiss the lawsuit.
“Audiobook streaming is a product or service that is distinct from music streaming and has more than token value,” she wrote. “Premium is, therefore, properly categorised as a Bundle.”
Applying the rate formula applicable to bundled subscription offerings results in a reduction of the service provider revenue that Spotify reports in the US. The move led to a row with the NMPA in the US.
In recent days, UMPG agreed a new deal with Spotify that improved those royalty rates for the publisher.
A Spotify spokesperson said: “We are pleased with this outcome, which demonstrates that, after careful review by the court, Spotify’s Premium service is appropriately categorised as a bundle and offers valuable content alongside music. Bundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry.
“We know the regulations can be complex, but there’s plenty of room for collaboration – and our recent deal with UMPG shows how direct licenses can create flexibility and additional benefits.”
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