Spotify has won a lawsuit, with court ruling that its audiobook-music bundle complies with federal royalty regulations, despite controversy.
Spotify has defeated a lawsuit from the Mechanical Licensing Collective that accused the streaming giant of unfairly cutting royalty rates as part of its audiobooks-music “bundling” option announced last year, according to Billboard.
Although the MLC claimed that Spotify had “unilaterally and unlawfully” cut its music-royalty payments via the bundle, a federal judge ruled that its move was supported by “unambiguous” regulations.
In her decision on Wednesday, Judge Analisa Torres said that federal royalty rate rules clearly allowed Spotify to legally claim the lower rate.
“Audiobook streaming is a product or service that is distinct from music streaming and has more than token value,” she wrote.
“Premium is, therefore, properly categorised as a Bundle.”
Billboard has estimated that Spotify’s “bundle” would result in the company paying roughly $150 million less over the next year.
Announced May 2024, Spotify confirmed that its premium plans combining music and audiobooks will mean a lower mechanical royalty rate for songwriters on those plans, although it claims that earnings for creators will continue to rise.
“Spotify is on track to pay publishers and societies more in 2024 than in 2023,” it claimed at the time “As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers,” the statement reads. “Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.” The final sentence is in reference to plans offered by Amazon which offers its music streaming as part of its Prime service Apple and others.
