Spotify and MLC win latest royalty ruling
The battle for mechanical royalties in the streaming era continues to unfold, pitting major tech platforms against music rights organizations in a high-stakes legal showdown. At the center of this dispute is the question of how music and audiobooks should be classified under federal royalty rules, and whether streaming bundles deserve special treatment.
In a significant ruling, U.S. District Judge Analisa Torres issued a mixed decision regarding the ongoing legal fight between Spotify and The Mechanical Licensing Collective (MLC). While the court affirmed Spotify’s position on the classification of its Premium offerings, it simultaneously dismissed Spotify’s attempt to use an equitable defense.
The dispute originated in May 2024 when the MLC sued Spotify over its decision to label Premium Individual, Duo, and Family plans as “Bundled Subscription Offerings” after incorporating audiobook access. This distinction is critical because federal mechanical royalty calculations treat standalone music subscriptions differently than bundled services, potentially affecting how revenue is attributed to songwriters and publishers.
In January 2025, Judge Torres sided with Spotify, ruling that Premium subscriptions qualify as a bundle because subscribers receive music alongside a significant amount of audiobook listening, qualifying as “more than token value.” The MLC sought permission to appeal this ruling before the case concluded, but the court determined they lacked sufficient legal grounds to justify a mid-case appeal.
However, the court also ruled against Spotify’s attempt to claim “unclean hands.” Spotify had argued that the MLC was selectively targeting it while ignoring other streaming services with similar reporting practices. The court rejected this defense, concluding that there was no legal requirement for the MLC to enforce Section 115 against every streaming service identically.
Despite these victories, the core legal question remains intensely active. The lawsuit is far from over, having evolved beyond the initial argument about bundle classification. The MLC has filed an amended complaint, shifting the focus from the definition of a bundle to the mechanics of royalty calculation. The new focus is whether Spotify is accurately calculating the mechanical royalties owed on those bundled subscriptions, including the value assigned to the audiobook component.
Thus, while Spotify successfully defended its classification of the service, the ultimate tension remains: determining if the music industry’s vast digital revenue streams are being accurately attributed and paid to the creators who make the art.
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