Spotify, the leading music streaming platform, is facing a lawsuit in a US federal court over allegations of underpaying songwriters, composers, and publishers, amounting to tens of millions of dollars.
The Mechanical Licensing Collective (MLC), a non-profit organization responsible for collecting and distributing royalties from music streaming services, filed the lawsuit against Spotify USA in New York on Thursday.
According to MLC, Spotify made significant changes to its paid subscription services on March 1, resulting in a nearly 50 percent reduction in royalty payments to the organization, without prior notice.
MLC stated that Spotify’s actions could have a substantial financial impact on songwriters and music publishers, potentially amounting to hundreds of millions of dollars.
Spotify reclassified its Premium Individual, Duo, and Family subscription plans as Bundled Subscription Offerings, citing the inclusion of audiobooks. However, MLC argued that Premium subscribers already had access to audiobooks, and nothing additional was bundled with the service.
Spotify responded to the lawsuit, mentioning that the terms in question were agreed upon by publishers and streaming services years ago. The company emphasized its record payments in royalties last year and expressed its commitment to paying out even larger amounts in 2024.
In February, Spotify disclosed that it paid a total of $9 billion to musicians and publishers in royalties last year, with approximately half of that amount going to independent artists.
