Music streaming giant Spotify has been taken to court in the United States, accused of underpaying songwriters, composers, and publishers by tens of millions of dollars.
The lawsuit, initiated by the Mechanical Licensing Collective (MLC), a non-profit organization responsible for collecting and distributing royalties from music streaming services, was filed in New York on Thursday.
The MLC’s lawsuit claims that on March 1, Spotify reclassified its paid subscription services without prior notice, leading to a nearly 50 percent reduction in royalty payments to the MLC.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for Songwriters and Music Publishers,” MLC stated.
The MLC warns that if Spotify’s alleged underreporting continues unchecked, the impact on songwriters and music publishers could reach hundreds of millions of dollars.
The reclassification reportedly affects Spotify’s Premium Individual, Duo, and Family subscription plans, which now include audiobooks and are categorized as Bundled Subscription Offerings.
Royalties for bundled services are significantly lower than those for standalone services.
According to the MLC, Premium subscribers already had access to audiobooks, and “nothing has been bundled with it.”
The MLC emphasized, “Premium is exactly the same service that Spotify offered to its subscribers before the launch of Audiobooks Access.”
In response, Spotify stated that the lawsuit “concerns terms that publishers and streaming services agreed to and celebrated years ago.”
The company highlighted its record royalty payments last year and its expectation to pay even more in 2024.
“We look forward to a swift resolution of this matter,” the Swedish company said.
Earlier this year, Spotify announced it had paid $9 billion to musicians and publishers in 2023, with about half going to independent artists.
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