MLC’s Bundles Lawsuit Against Spotify Dismissed, Spotify Celebrates a Victory

The conflict between Spotify and MLC began in March 2024 when Spotify reclassified its Premium tiers in the US as “bundles” by adding 15 hours of audiobook access every month. Notably, this classification allowed Spotify to compensate publishers and songwriters with lower mechanical royalty rates intentionally.

In response, MLC filed a lawsuit against the streaming giant in May 2024, claiming that Spotify was underpaying royalties to songwriters and publishers due to the bundling move. The organization further argued that audiobooks had only “token value” and did not qualify as a distinct bundled product, making Spotify’s audiobook bundling offerings unjustifiable.

Additionally, MLC pointed out that Spotify introduced audiobook access in November 2023, months before the bundling move was officially announced in pricing and royalty statements. In turn, MLC demanded millions of dollars in additional royalties from Spotify.

Unfortunately, however, MLC's case was dismissed after nearly eight months of litigation. In January this year (2025), the presiding judge of the US District Court for the Southern District of New York ruled in favor of Spotify, granting its motion to dismiss the lawsuit “with prejudice,” meaning the case cannot be refiled.

“The Court finds that § 115 and its implementing regulations are unambiguous and that the only plausible application of the law supports Spotify’s position,” Judge Analisa Torres stated.

“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.” was further added in the final ruling.

Torres also addressed MLC’s arguments about the timing of Spotify's addition of audiobook access and its official announcement of the bundling shift.

“That Spotify did not immediately report Premium as a Bundle to MLC in November 2023 although it could have, and thus likely paid more in royalties to MLC than it was otherwise required to pay, does not mean that Spotify’s later decision to reclassify Premium as a Bundle is invalid.”Judge Torres concluded.

Naturally, Spotify welcomed the ruling: “We are 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,” a company spokesperson told Music Business Worldwide (MBW).

Meanwhile, the MLC acknowledged Judge Torres's decision in a statement but expressed continued concern over Spotify’s approach.

“We continue to be concerned that Spotify’s actions are inconsistent with the law, and 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.”