Dear Member,

We are writing to inform you that today, Thursday, May 16, 2024, The MLC brought a legal action against Spotify USA Inc. (Spotify) to recover blanket royalties due under the compulsory mechanical blanket license that Spotify obtained to enable its consumer music streaming platform. A copy of the complaint can be found here.

Why did The MLC bring this action?

Beginning in March 2024, Spotify asserted that its Premium Individual, Duo and Family subscription streaming plans were now Bundled Subscription Offerings because those plans included access to audiobooks. Applying the rate formula applicable to Bundled Subscription Offerings results in a reduction of the Service Provider Revenue that Spotify reports, which results in an underpayment of royalties.

The MLC believes that Spotify’s position does not comply with applicable law and regulations. The MLC has statutory authority to address Spotify’s noncompliance with its royalty payment obligations. The MLC is taking legal action to enforce these obligations and ensure that Spotify pays all royalties due from its use of songs on Premium plans.

Why are legal efforts important?

As the sole entity authorized to use legal efforts to enforce blanket license terms, it is The MLC’s legal responsibility to take action on behalf of our Members when we believe usage reporting and royalty payments are incorrect.

What happens next?

We have filed this legal action in the United States District Court for the Southern District of New York. Spotify will have an opportunity to respond, after which the court will set and manage a case schedule for the proceeding. Once the matter is resolved, we will give Members an explanation of the outcome and details on any royalty adjustments.

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