MLC Considers Appeal Following Spotify's Court Victory in Music Bundling Case
The Mechanical Licensing Collective (MLC) is considering all available options, including an appeal, following Spotify's court victory in their bundling lawsuit dismissal in May 2024.
Court victory for Spotify bundling case
The MLC expressed concerns that Spotify's actions violate existing laws, stating that the court's decision doesn't align with key legal principles and facts central to the case.
At issue is Spotify's strategy of bundling audiobooks into its Premium subscription plans (Individual, Duo, and Family). This bundling approach has allowed Spotify to reduce its reported service provider revenue, leading to lower royalty payments. Reports indicate Spotify has saved approximately $100 million since moving 98% of its subscribers to bundled options.
The court victory has positively impacted Spotify's market position, with KeyBanc raising its price target from $555 to $600, citing strong subscriber growth and margin momentum. The recent early renewal of Spotify's UMG deal has further strengthened its position to reach its 20%+ revenue growth target.
The broader industry implications are significant, as other Digital Service Providers (DSPs) watch closely. Amazon has already followed suit by adding audiobooks to its Music Unlimited plan at no extra cost. This trend could result in widespread adoption of bundled plans, potentially benefiting DSPs while reducing compensation for publishers and songwriters.
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