Judge Sides with Spotify in Lawsuit Over Songwriter Royalties

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Spotify’s incorporation of audiobooks into its subscription plans appears to have an extra financial benefit for the streamer as a federal judge has dismissed a lawsuit from the music publishing industry over bundling tactics that allowed for decreased royalty rates.

The news comes as Spotify announced its first-ever net profit in its 2024 year-end results.

Filed by the Mechanical Licensing Collective in May, the suit alleged that Spotify had unlawfully reduced royalty payments to songwriters after introducing audiobooks as part of its premium subscription. MLC said that Spotify’s actions amounted to an “unlawful” rate reduction of up to 50%. Spotify maintained that its actions complied with a 2022 settlement with music publishers, approved by the Copyright Royalty Board, which allows streaming services to pay lower royalties on music when bundled with other services.

By classifying its services as a bundle under the Phonorecords IV royalty formula, Spotify cuts its US mechanical royalties by an estimated $150 million. The National Music Publishers Association previously called it a “cynical and potentially unlawful move.” The Nashville Songwriters Association International condemned the strategy, stating it “counters every statement Spotify has ever made of claiming the company is friendly to creators.”

Judge Analisa Torres ruled in favor of Spotify, stating that the company was within its legal rights to bundle services and audiobook streaming has more than “token value.”

The MLC responded to the ruling with continued concerns over Spotify’s royalty practices and that they are reviewing appeal options.

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