Spotify has issued a strong response to the Mechanical Licensing Collective's (MLC) lawsuit regarding alleged underpayment of publishing royalties. The dispute centers around Spotify's bundling practices for its music, audiobook, and podcast offerings.

Key Points of the Dispute:

• The MLC claims Spotify is illegally reducing royalty payments by classifying Premium Individual, Duo, and Family plans as bundled subscriptions that include audiobook access
• Spotify maintains these bundling practices were explicitly approved in the Phonorecords IV agreement
• The streaming platform reports record publisher and society payments in 2023, with projected increases for 2024

Spotify's Defense:

1. Bundling terms were included and agreed upon in the Phonorecords IV agreement
2. Multiple DSPs (Digital Service Providers) utilize bundle offerings
3. Publishers and streaming services previously celebrated these terms
4. The company argues all practices are compliant with applicable laws

Industry Context:

• Major labels have remained quiet on the bundling issue
• Recording industry executives generally support Spotify's bundling strategy
• Publishers are pursuing this battle independently, despite often being subsidiaries of major label groups
• The MLC has distributed over $2 billion to songwriters and publishers since January 2021

The case is currently pending in the United States District Court for the Southern District of New York, with Spotify seeking a swift resolution while maintaining its position that all practices are legitimate and previously agreed upon.

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