© Christian Hartmann/Reuters
Spotify is seeking a US district court to dismiss a lawsuit against it filed by The Mechanical Licensing Collective. The MLC filed the suit last year after Spotify began recharacterizing its premium paid subscription plan as a “bundle”. This has lowered the mechanical royalty payments that music publishers and songwriters are entitled to in the US.
In its motion to dismiss, Spotify argues that the addition of audiobooks adds more than nominal value. The MLC counters, however, that the audiobooks are no more than negligible value.
If The MLC prevails, Spotify estimates it would owe $50 million in additional mechanical royalties based on calculations in an SEC filing. The exact numbers: additional royalties of $49.52M for the three months from March to June 2024; for Q2 2024 alone, the figure would stand at $37.68M per quarter.
As part of a bundle, Spotify might slash around $37.68 million off its quarterly mechanical royalty payments on its premium plan. Annualized for years starting after the March 2024 change, the payments would fall around $150 million.
Spotify began offering audiobooks to Premium subscribers in late 2023, along with a stand-alone Audiobooks Access plan. In March 2024, it notified The MLC that it had made the classification change. That, according to The MLC’s suit, didn’t provide value for customers at the price and the way those services were marketed. Spotify disagrees, and the case is ongoing.
