Music Business

MLC sues Spotify for unpaid Songwriter Royalties, Spotify responds

The Mechanical Licensing Collective (MLC) has filed a lawsuit against Spotify, seeking what it says are unpaid royalties due under its compulsory mechanical blanket license.

The legal action comes after Spotify reclassified its Premium Individual, Duo, and Family subscription plans as “Bundled Subscription Offerings” because those plans include access to audiobooks. By some estimates, the reclassification could cost songwriters up to $150 million annually.

The MLC administers the blanket compulsory license for the use of musical works by digital music services. The lawsuit alleges that Spotify’s position does not comply with applicable laws and regulations and that the MLC has statutory authority to address non-compliance.

“The MLC was designated by the Register of Copyrights to administer the blanket license and is the only entity with the statutory mandate to collect and distribute blanket license royalties and take legal action to enforce royalty payment obligations,” said The MLC’s CEO Kris Ahrend. “The MLC takes seriously its legal responsibility to take action on behalf of our Members when we believe usage reporting and royalty payments are materially incorrect.”

Spotify responded with this statement:

“The lawsuit concerns terms that publishers and streaming services agreed to and celebrated years ago under the Phono IV agreement. Bundles were a critical component of that settlement, and multiple DSPs include bundles as part of their mix of subscription offerings. Spotify paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024. We look forward to a swift resolution of this matter.

Spotify vs. Songwriters

The contentious relationship between Spotify and songwriters over royalties has recently grown more combative.

On Wednesday, Spotify got a cease-and-desist letter from the National Music Publishers Association (NMPA) regarding the streamer’s use of lyrics in newly launched video functions and a remix feature that enables users to speed up and edit songs to create derivative works.

In response to the NMPA’s cease and desist letter, a Spotify spokesperson said:

“This letter is a press stunt filled with false and misleading claims. It’s an attempt to deflect from the Phono IV deal that the NMPA agreed to and celebrated back in 2022. We paid a record amount to benefit songwriters in 2023, and we are on track to exceed this amount in 2024. Spotify is a platform for licensed content. We are committed to the integrity of our platform, and we have a clear process in place for rightsholders to contact Spotify about any content they believe is unlicensed.” 

The NMPA has also been critical of Spotify’s reclassification of bundles and the effect it will have on songwriters.

Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a Berklee College Of Music professor.

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