Spotify has successfully fended off a lawsuit filed by the Mechanical Licensing Collective (MLC), which accused the streaming giant of underreporting its revenue to avoid paying proper royalties to songwriters. In a ruling issued by U.S. District Judge Analisa Torres, the case was dismissed after the judge found that Spotify’s classification of its service was accurate and did not violate the terms of its licensing agreement.
The MLC had argued that Spotify mischaracterized its Premium service by bundling music and audiobooks together, claiming this reclassification would significantly reduce the royalties owed to music creators. According to the MLC, this move could result in a loss of nearly $150 million for songwriters in the following year. However, Judge Torres ruled that audiobooks are distinct from music streaming, validating Spotify’s claim that its Premium offering is properly categorized as a bundle that includes both.
This legal victory comes as a relief to Spotify, with a company spokesperson expressing satisfaction with the outcome. The MLC, while acknowledging the ruling, indicated they are evaluating their next steps, including the possibility of an appeal.
The case, Mechanical Licensing Collective v. Spotify USA Inc, was heard in the U.S. District Court for the Southern District of New York.
