Spotify has won a lawsuit over lowered payments to songwriters due to its bundling strategy. The company introduced a premium subscription that included audiobooks, which led to a reduction in the royalty rate paid to songwriters.
Spotify argued that the change was in line with a settlement they reached with music publishers in 2022. The settlement allowed streaming services to pay less for subscriptions bundled with other services.
In May 2023, the Mechanical Licensing Collective (MLC) filed a lawsuit, accusing Spotify of reducing payments to songwriters by up to 50% without warning. The MLC, which is responsible for issuing mechanical licenses to streaming services, argued that Spotify misclassified the bundle and acted unlawfully.
However, a federal judge dismissed the lawsuit on January 29, 2025. The judge ruled that Spotify’s bundling strategy was legal, stating that audiobook streaming is distinct from music streaming and that the bundle was valid under the law. Judge Analisa Torres wrote that the law “supports Spotify’s position.”
Despite the ruling, the MLC expressed disappointment, stating that Spotify’s actions did not align with the law. They are considering an appeal.
Spotify responded positively to the decision, saying they were pleased with the outcome, which affirmed that their Premium service is properly categorized as a bundle.
