Spotify Technology SA is facing a lawsuit from the Mechanical Licensing Collective, which collects payments for musicians and publishers. The lawsuit alleges that Spotify made a legalistic word change in March that allowed them to reduce the royalties paid to artists by almost 50%. This change was made by adding the word “bundled” to the description of their $10.99-a-month music streaming service, despite no actual changes being made to the service itself. The collective is unable to disclose the exact amount of revenue lost by artists, but a Billboard story estimated it to be around $150 million next year.
Spotify contends that the lawsuit concerns terms that were agreed upon by publishers and streaming services years ago, including the use of bundles as part of subscription offerings. The streaming service claims to have paid a record amount to publishers and societies in 2023, with even larger payments expected in 2024. However, the fight over bundling has escalated into a broader dispute between Spotify and publishers, with the National Music Publishers’ Association accusing Spotify of infringing on songwriters’ copyrights with products like music videos, lyrics, and podcasts on the platform.
The NMPA sent a cease-and-desist letter to Spotify over the alleged copyright infringement, calling out the streaming service for choosing the “hard road” by targeting songwriters. David Israelite, CEO of NMPA, expressed disappointment in Spotify’s actions and suggested that they could have worked together to address the issue before the bundling controversy arose. In response, Spotify defended its practices, stating that they have complied with the terms agreed upon with publishers and societies and have made significant payments to rights holders.
The lawsuit and cease-and-desist letter highlight the ongoing tension between streaming services like Spotify and music publishers over royalty payments and copyright issues. While Spotify maintains that their actions are in line with industry standards and agreements, the collecting agencies and publishers are pushing back against what they see as unjust reductions in royalties and unauthorized use of copyrighted material. The outcome of these legal battles could have significant implications for how streaming services compensate artists and license music in the future.
