Spotify has formally responded to the Mechanical Licensing Collective's (MLC) lawsuit regarding unpaid royalties, presenting arguments for dismissal in a pre-motion letter to the court.

The core dispute centers on Spotify's audiobook "bundles" and their impact on mechanical royalty calculations. Due to recent changes in Spotify's subscription structure, nearly all U.S. subscriptions are now classified as bundles, resulting in significantly lower royalty payments under the Phonorecords IV determination.

Key Points of Spotify's Defense:

• Audiobooks have "significant, demonstrable value" within Spotify Premium
• Books and audiobook streaming are distinct from music, created and licensed by different rights holders
• The timing between audiobook integration and bundle recalibration is legally irrelevant
• Spotify is not required to market its Audiobook Access product in any particular way

Financial Impact:

• Publishers are losing over $10 million monthly in U.S. mechanical royalties
• The current determination extends through 2027
• The changes could influence other streaming services to adopt similar bundling strategies

Case Timeline:

• MLC filed the lawsuit in mid-May
• MLC's response to Spotify's arguments expected around July 26th
• Document request deadline: August 9th
• Deposition completion deadline: November 19th
• Next case management conference: December 9th

While Spotify has made unbundled audiobook-free subscriptions available, the complexity of finding these plans and the manual switch requirement makes a widespread return to unbundled subscriptions unlikely in the near term.

Related Articles

Previous Articles