MLC takes legal action against Spotify for cutting songwriters’ pay via premium bundles

The Mechanical Licensing Collective (The MLC) has filed a lawsuit against Spotify in the United States, alleging the streaming platform has been underpaying royalties to songwriters and publishers.

The lawsuit, lodged in the United States District Court for the Southern District of New York on Thursday 16^th May, revolves around Spotify’s decision in early March to reclassify its Premium Individual, Duo, and Family subscription streaming plans as Bundled Subscription Offerings due to their inclusion of audiobooks.

According to Phonorecords IV, a 2022 legal settlement between music publishers and streaming services, bundle services in the US are allowed to pay a lower mechanical royalty rate to publishers and songwriters than standalone music subscription services.

The MLC contends that Spotify’s application of the bundle rate formula to its Premium subscriptions results in underpaid royalties to songwriters and publishers, a position it argues is not compliant with the law.

As the non-profit organisation designated by the US Copyright Office to ensure proper royalty payments from music streaming services like Spotify, the MLC asserts in its lawsuit that Spotify’s classification of Premium as a Bundled Subscription Offering contradicts Section 115 regulations, which the MLC is primarily responsible for interpreting and enforcing.

You can read the full lawsuit here.