Spotify has won a significant legal victory in the Mechanical Licensing Collective (MLC) bundling lawsuit, with the federal judge dismissing the case with prejudice.

The lawsuit challenged Spotify's decision to reclassify its U.S. subscriptions as music and audiobook bundles, a move that significantly impacts compositional royalties. Currently, bundles represent over 99% of Spotify's U.S. subscriptions, resulting in royalty savings exceeding $100 million within months.

Key Points from the Court's Decision:

• Judge Analisa Torres found Section 115 and its implementing regulations "unambiguous"
• The court confirmed audiobook streaming is a distinct product from music streaming with more than token value
• Premium service was properly categorized as a Bundle
• The timing of Spotify's bundle implementation was deemed irrelevant to the case
• The number of subscribers accessing audiobooks does not affect the bundle classification

Industry Impact:

• The ruling may influence other streaming platforms' bundling strategies
• Apple Music and Amazon Music could potentially implement similar approaches
• Spotify has already secured a direct deal with Universal Music Publishing Group

Spotify emphasized that bundle offerings play a crucial role in expanding paid music consumption and growing industry revenue. The company has indicated plans for further expansion, including a potential "Courses" feature in the U.S.

The ruling establishes a clear legal precedent for streaming services' bundling strategies, potentially reshaping the future of music streaming economics and royalty structures.

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