Spotify Wins Legal Battle Against U.S. Licensing Group Over Royalties

Spotify has secured a legal victory in a lawsuit filed by the U.S. Mechanical Licensing Collective (MLC), which accused the company of underpaying songwriting royalties. The dispute revolved around Spotify’s decision to classify its Premium streaming service as a bundled offering, which allegedly reduced the royalties paid to songwriters and publishers.

Court Rules in Favor of Spotify

The case, brought before a federal court, claimed that Spotify restructured its Premium service by including audiobooks in an attempt to lower its royalty obligations. The MLC, responsible for collecting mechanical royalties on behalf of songwriters, argued that the move was an intentional misclassification designed to benefit Spotify financially.

However, U.S. District Judge Analisa Torres ruled that Spotify’s actions were lawful and that the company's description of its service as a bundle was accurate. The court determined that audiobooks hold independent value and can reasonably be considered part of a bundled subscription.

"The plaintiff failed to plausibly demonstrate that Spotify's bundling strategy was misleading or in violation of any licensing agreements," Judge Torres stated in her decision.

Spotify’s Response and Industry Impact

Following the ruling, Spotify expressed satisfaction with the outcome. "We have always complied with our licensing obligations, and we are pleased that the court recognized our approach as legitimate," a company spokesperson said.

The decision is a setback for the MLC, which sought additional royalty payments for songwriters and publishers. The ruling may also influence how streaming platforms structure their subscription offerings in the future, as bundling music with other digital content—such as audiobooks and podcasts—becomes increasingly common.

As the music industry continues to evolve, the balance between streaming services and content creators remains a contentious issue. While Spotify has emerged victorious in this case, the broader conversation around fair compensation for artists in the digital age is far from over.

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