Neither Spotify nor The Mechanical Licensing Collective walked away empty-handed from the latest round of their royalty dispute.
U.S. District Judge Analisa Torres issued a mixed ruling September 1, denying The MLC’s request to immediately appeal an earlier decision finding that Spotify can legally classify its Premium music-and-audiobook subscriptions as “bundles.” At the same time, Torres granted The MLC’s request to strike Spotify’s “unclean hands” defense.
That leaves an important Spotify victory in place while the broader fight over how much the streamer should be paying songwriters and publishers continues.
The audiobook bundle ruling stands — for now
The dispute dates back to May 2024, when The MLC sued Spotify over its decision to report Premium Individual, Duo and Family plans as “Bundled Subscription Offerings” after adding audiobook access.
The distinction matters because federal mechanical royalty rules calculate payments differently for standalone music subscriptions and bundles. Spotify’s classification allows part of subscription revenue to be attributed to audiobooks before mechanical royalties for music are calculated.
In January 2025, Torres sided with Spotify, ruling that Premium qualifies as a bundle because subscribers receive music alongside another service — 15 hours of audiobook listening per month — with “more than token value.”
The MLC wanted permission to appeal that ruling before the rest of the case was resolved.
Torres said "no." The court found The MLC had not shown enough disagreement over the relevant law to justify an interlocutory, or mid-case, appeal. Spotify’s victory on the basic question of whether Premium can be considered a bundle therefore remains intact while litigation continues.
But Spotify loses its “unclean hands” defense
The MLC prevailed elsewhere. Spotify had accused The MLC of selectively targeting it while allegedly failing to pursue other streaming services over similar reporting practices. Spotify argued that amounted to “unclean hands,” an equitable defense that can prevent a plaintiff from obtaining relief when its own misconduct is tied to the dispute.
Torres rejected the argument, finding no legal requirement that The MLC enforce Section 115 against every streaming service “in the same way, the same manner, and at the same time.”
The court concluded Spotify’s defense “has no basis in law” and ordered it stricken.
The Spotify-MLC lawsuit is still alive
Importantly, the original lawsuit’s dismissal did not end the case.
The MLC subsequently filed an amended complaint advancing different theories. Rather than simply arguing Spotify cannot call Premium a bundle, it now alleges Spotify improperly calculated the royalties owed on those bundles — including through the value assigned to Premium’s audiobook component.
So the legal question has shifted. Spotify has, so far, successfully defended the proposition that music plus audiobooks can qualify as a bundle under federal royalty rules.
What remains unresolved is whether Spotify is calculating that bundle correctly — and therefore paying the correct amount of mechanical royalties to songwriters and publishers.
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