Music streaming giant Spotify has been sued in a US federal court for allegedly underpaying songwriters, composers, and publishers by tens of millions of dollars. The lawsuit, filed in New York on Thursday, May 16, 2024 by the Mechanical Licensing Collective (MLC), accuses Spotify USA of significant royalty underpayments.
According to the MLC, Spotify reclassified its paid subscription services on March 1 without advance notice, leading to a nearly 50 percent reduction in royalty payments. The MLC, a non-profit that collects and distributes royalties from music streaming services, claims that this reclassification has had severe financial consequences for songwriters and music publishers.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for Songwriters and Music Publishers,” the MLC said. “If unchecked, the impact on Songwriters and Music Publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
The lawsuit alleges that Spotify reclassified its Premium Individual, Duo, and Family subscription plans as Bundled Subscription Offerings because they now include audiobooks. Royalties paid on bundled services are significantly less. The MLC contends that Premium subscribers already had access to audiobooks and that “nothing has been bundled with it.”
“Premium is exactly the same service that Spotify offered to its subscribers before the launch of Audiobooks Access,” the MLC stated.
In response, Spotify said the lawsuit “concerns terms that publishers and streaming services agreed to and celebrated years ago.” The Swedish company also mentioned that it paid a “record amount” in royalties last year and is “on track to pay out an even larger amount in 2024.”
“We look forward to a swift resolution of this matter,” Spotify said. In February, the company reported that it paid $9 billion to musicians and publishers last year, with about half going to independent artistes.
