Spotify Technology SA won dismissal of a lawsuit alleging it made a change to its premium service that cheated songwriters out of royalties.
US District Judge Analisa Torres on Wednesday threw out the suit, filed in May by the Mechanical Licensing Collective, which collects payments from streaming services for songwriters, composers, lyricists and publishers.
The collective claimed that the company used a legalistic word change — adding “bundled” to the description of the service — to justify reducing the revenue on which royalties are based by almost 50%. The collective is legally barred from disclosing how much the royalties declined but cited a Billboard story that estimated the loss would amount to about $150 million in 2025.
The group alleged that by calling the service an offering that includes both music streams and audiobooks, Spotify has “significantly reduced” the royalties it pays. But Torres said the service is “properly categorized” as a bundle, as audiobook streaming “is a product or service that is distinct from music streaming and has more than token value.”
Neither the Mechanical Licensing Collective nor Spotify immediately responded to requests for comment on the ruling.
Spotify, which had 640 million monthly users as of the third quarter, has been expanding in recent years to include audiobooks, podcasts and other offerings besides its core music catalog. The National Music Publishers’ Association, which represents music publishers and songwriters, filed a complaint with the US Federal Trade Commission in June over Spotify’s decision to provide audiobooks to subscribers, which the group said resulted in reduced royalty payments to songwriters.
The MLC case is Mechanical Licensing Collective v. Spotify USA Inc., 24-cv-3809, US District Court, Southern District of New York (Manhattan).
Top photo: The Spotify website on a laptop computer arranged in Hastings-on-Hudson, New York, on Wednesday, Jan. 25, 2023.
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