Music streaming giant Spotify has been sued for underpaying songwriters, composers, and publishers by tens of millions of dollars at a US court.
The lawsuit was filed in New York on Thursday by the Mechanical Licensing Collective (MLC), a non-profit organization responsible for collecting and distributing royalties from music streaming services.
The MLC alleges that on March 1, Spotify reclassified its paid subscription services without advance notice, resulting in a nearly 50 percent reduction in royalty payments to the collective.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the MLC stated. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
According to the MLC, Spotify reclassified its Premium Individual, Duo, and Family subscription streaming plans as Bundled Subscription Offerings because they now include audiobooks. Royalties paid on bundled services are significantly less. The MLC argues 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 said.
In response, Spotify stated that the lawsuit “concerns terms that publishers and streaming services agreed to and celebrated years ago.” The company claimed 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,” the Swedish company said.
In February, Spotify announced it had paid $9 billion to musicians and publishers last year, about half of which went to independent artists.
