Sony Music Publishing is considering legal action against Spotify following the streaming platform's recent changes to its royalty payment structure. The dispute centers around Spotify's bundling of audiobooks with premium subscriptions, which has led to reduced mechanical royalty payments for songwriters.

Key Points:

• Spotify began paying reduced mechanical royalty rates (approximately 20% less) starting March 2024
• The reduction affects U.S. royalties only
• The Mechanical Licensing Collective (MLC) has filed a lawsuit against Spotify in New York Federal Court
• The National Music Publishers' Association (NMPA) has issued a cease-and-desist letter regarding unlicensed content

Sony Music Publishing CEO Jon Platt states they disagree with Spotify's position, arguing that while the Copyright Royalty Board (CRB) rate structure allows for discounted bundle rates in certain circumstances, this offering doesn't meet the agreed parameters.

Spotify defends its actions by referring to the 'Phonorecords IV' agreement, claiming the terms were previously agreed upon by publishers and streaming services.

Additional Concerns:

• Questions about music usage in podcasts and videos
• Unauthorized use of lyrics
• Potential limitations on publishers' ability to remove content due to statutory and compulsory licensing rules

The situation continues to develop as multiple industry stakeholders, including the MLC, NMPA, and major publishers, challenge Spotify's interpretation and implementation of royalty rates.

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