{"id":3931,"date":"2025-01-29T17:45:24","date_gmt":"2025-01-29T17:45:24","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/spotify-beats-mlc-audiobook-lawsuit\/"},"modified":"2025-01-29T17:45:24","modified_gmt":"2025-01-29T17:45:24","slug":"spotify-beats-mlc-audiobook-lawsuit","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/spotify-beats-mlc-audiobook-lawsuit\/","title":{"rendered":"Spotify Beats MLC Audiobook Lawsuit"},"content":{"rendered":"\n
\n

\n\tSpotify won a ruling Wednesday dismissing a lawsuit from the Mechanical Licensing Collective that accused the streamer of unfairly slashing royalty rates, with a federal judge ruling that Spotify\u2019s move was supported by \u201cunambiguous\u201d regulations.<\/p>\n

\n\tThe MLC sued last year, claiming Spotify had \u201cunilaterally and unlawfully\u201d chosen to cut its music royalty payments nearly in half through bookmaking trickery \u2013 namely, by claiming that the addition of audiobooks to the platform entitled the company to pay a lower \u201cbundled\u201d rate.<\/p>\n

\n\tBut in her decision on Wednesday, Judge Analisa Torres<\/strong> said that federal royalty rate rules clearly allowed Spotify to legally claim the lower rate, rejecting MLC\u2019s argument that the company was not actually offering a \u201cbundle\u201d of services.<\/p>\n

\n\t\u201cAudiobook streaming is a product or service that is distinct from music streaming and has more than token value,\u201d the judge wrote, alluding to the specific wording of the federal rule. \u201cPremium is, therefore, properly categorized as a Bundle.\u201d<\/p>\n

\n\tA spokeswoman for the MLC did not immediately return a request for comment on the ruling.<\/p>\n

\n\tThe MLC, which collects streaming royalties for songwriters and publishers, filed its lawsuit in late May \u2014 a week after Billboard<\/em> estimated that Spotify\u2019s move would result in the company paying roughly $150 million less over the next year. In its complaint, the MLC claimed Spotify was \u201cerroneously recharacterizing\u201d the nature of its streaming services to secure the lower rate.<\/p>\n

\n\t\u201cThe financial consequences of Spotify\u2019s failure to meet its statutory obligations are enormous for songwriters and music publishers,\u201d the group\u2019s attorneys wrote at the time. \u201cIf unchecked, the impact on songwriters and music publishers of Spotify\u2019s unlawful underreporting could run into the hundreds of millions of dollars.\u201d<\/p>\n

\n\tAt issue in the lawsuit is Spotify\u2019s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it\u2019s now entitled to pay a discounted \u201cbundled\u201d royalty rate under the federal legal settlement that governs how much streamers pay rightsholders.<\/p>\n

\n\tIn Wednesday\u2019s ruling, Judge Torres agreed. She said the rules required only that Spotify offered a different service and that it provided users with more than \u201ctoken value\u201d \u2013 and that the addition of audiobooks was clearly covered by those terms.<\/p>\n

\n\tMLC\u2019s attorneys had argued that audiobooks were that kind of \u201ctoken\u201d non-factor, since Spotify didn\u2019t raises prices when it added them and only a small proportion of subscribers actually listen to them. MLC had claimed Spotify added the books was merely a \u201cpretext\u201d to cut rates for music.<\/p>\n

\n\tSpotify moved to dismiss the case in August, calling it \u201cnonsensical\u201d and \u201cwasteful.\u201d The company\u2019s attorneys blasted the MLC\u2019s argument that the audiobooks were aimed at a legal loophole, saying it \u201cprofoundly devalues the contributions of the tens of thousands of book authors.\u201d<\/p>\n

\n\tIn her decision on Wednesday, Judge Torres sided with Spotify\u2019s argument. Though she said the new offering might strike ordinary consumers as more of a \u201ctwo-for-one deal\u201d than a traditional bundle, she said Spotify\u2019s addition of the books had clearly brought more than nominal value to its users.<\/p>\n

\n\t\u201cMLC cannot plausibly claim that having access to audiobooks is not something of intrinsic and monetary value to many, even if only a fraction of Spotify\u2019s millions of Premium subscribers may take advantage of it,\u201d the judge wrote. \u201cThe court can draw only one conclusion: that 15 hours of monthly audiobook streaming is a product or service that has more than token value.\u201d<\/p>\n

\n\tIf anything, Judge Torres said, Spotify had \u201clikely paid more in royalties to MLC than it was otherwise required to pay\u201d because it did not immediately claim bundled status after introducing the audiobook feature.<\/p>\n

\n\tIn addition to dismissing the lawsuit, Judge Torres did not give MLC a chance to refile the case, saying the law was clear and that amending the accusations would be futile. The group can still challenge the ruling at a federal appeals court, however.<\/p>\n

\n\tIn a statement to Billboard<\/em> on Wednesday, a Spotify spokesperson said the company was \u201cpleased\u201d with the court\u2019s decision: \u201cBundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry. We know the regulations can be complex, but there\u2019s plenty of room for collaboration\u2014and our recent deal with [Universal Music Publishing Group] shows how direct licenses can create flexibility and additional benefits.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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