Last year, a lawsuit was filed against Spotify over a bundling strategy it adopted, which led to lowered payments to songwriters. The strategy involved an audiobook bundle added to the platform’s premium subscription.

With it, Spotify began paying a lesser royalty rate to songwriters, claiming the move was backed by a settlement they’d reached with music publishers in 2022 via the Copyright Royalty Board. According to the settlement, streaming services are permitted to pay less for music subscriptions bundled with other services.

Spotify was sued in May by the Mechanical Licensing Collective, the nonprofit responsible for issuing mechanical licenses to streaming services, with claims that Spotify had erroneously characterized the bundle and “unilaterally and unlawfully” reduced the rate to songwriters by as much as 50% without prior warning.

As Rolling Stone reports, a federal judge dismissed the lawsuit on Wednesday, January 29. In a memorandum filed on that date, the court determined Spotify was within its rights, calling the rule of the bundling “unambiguous.” Judge Analisa Torres wrote:

“The only plausible application of the law supports Spotify’s position. Under the facts as alleged, audiobook streaming is a product or service that is distinct from music streaming and has more than token value. Premium is, therefore, properly categorized as a Bundle, and the allegations of the complaint do not plausibly suggest otherwise.”

MLC made a statement, noting their continued concerns with Spotify behavior:

“The MLC brought this action to address the unprecedented steps taken by Spotify to significantly underreport royalties to The MLC. We continue to be concerned that Spotify’s actions are not consistent with the law and that today’s decision does not align with the facts and legal principles central to this action. We are reviewing the decision and evaluating all available options, including our right to appeal.”

Spotify made a statement to Rolling Stone, saying they were “pleased with this outcome, which demonstrates that, after careful review by the court, Spotify’s Premium service is appropriately categorized as a bundle and offers valuable content alongside music.”

Source: Ultimate-Guitar.com