The Allegations Against Spotify in Underpaying Songwriters and Composers

Recently, music streaming giant Spotify has come under fire for allegedly underpaying songwriters, composers, and publishers by tens of millions of dollars. The lawsuit was filed in a US federal court by the Mechanical Licensing Collective (MLC), a non-profit organization responsible for collecting and distributing royalties from music streaming services.

The lawsuit claims that Spotify made a significant change to its paid subscription services on March 1 without providing advance notice. This change resulted in a nearly 50 percent reduction in royalty payments to MLC, which has far-reaching financial consequences for songwriters and music publishers. The impact of Spotify’s actions could potentially amount to hundreds of millions of dollars in lost revenue for these parties.

According to MLC, Spotify reclassified its Premium Individual, Duo, and Family subscription streaming plans as Bundled Subscription Offerings due to the inclusion of audiobooks. The royalties paid on bundled services are substantially lower, despite Premium subscribers already having access to audiobooks without any additional bundling. This sudden change has raised concerns about Spotify’s compliance with its statutory obligations.

In response to the allegations, Spotify issued a statement claiming that the lawsuit concerns terms that were agreed upon by publishers and streaming services years ago. The company also highlighted that it paid a record amount in royalties last year and is expected to pay out an even larger sum in 2024. Spotify expressed its readiness for a prompt resolution of the matter while emphasizing its contributions to the music industry.

The legal battle between Spotify and the MLC underscores the complex relationship between music streaming services, songwriters, composers, and publishers. As the case unfolds, it will be crucial to examine the implications of Spotify’s reclassification of subscription services and its impact on royalty payments. The outcome of this lawsuit will likely have far-reaching consequences for the future of music streaming platforms and the fair compensation of music creators.