Mumbai: The Mechanical Licensing Collective (The MLC) has announced that it has filed a legal action against music streaming platform Spotify USA Inc. (Spotify) in the United States district court for the southern district of New York. The action seeks recovery of unpaid royalties due under the compulsory mechanical blanket license obtained by Spotify to reproduce and distribute musical works in the United States via its consumer music streaming platform.  

The action states that, 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.

“The MLC was designated by the Register of Copyrights to administer the blanket license and is the only entity with the statutory mandate to collect and distribute blanket license royalties and take legal action to enforce royalty payment obligations,” said The MLC’s CEO Kris Ahrend. “The MLC takes seriously its legal responsibility to take action on behalf of our Members when we believe usage reporting and royalty payments are materially incorrect.”

The MLC seeks corrected usage reporting and associated unpaid royalties for periods dating back to March 2024, along with an order requiring compliance going forward. A copy of the complaint can be found here.