A federal judge has issued a split decision in the mechanical royalty dispute between Spotify and The Mechanical Licensing Collective (MLC), preserving Spotify’s ability to classify certain Premium plans as bundles while striking one of its defenses.
The September 1 order from U.S. District Judge Analisa Torres leaves the broader question of whether Spotify is paying songwriters and publishers the correct mechanical royalties unresolved.
Bundle classification remains intact
The case began in May 2024, when the MLC sued Spotify over its decision to report Premium Individual, Duo and Family plans as “Bundled Subscription Offerings” after adding audiobook access.
Federal mechanical royalty rules calculate payments differently for standalone music subscriptions and bundles. Spotify’s classification allows part of subscription revenue to be attributed to audiobooks before mechanical royalties for music are calculated.
In January 2025, Torres sided with Spotify, ruling that Premium qualifies as a bundle because subscribers receive music alongside another service: 15 hours of audiobook listening per month with “more than token value.”
The MLC sought permission to appeal that ruling before the rest of the case was resolved. Torres denied the request, finding the MLC had not shown enough disagreement over the relevant law to justify an interlocutory, or mid-case, appeal.
Spotify’s victory on the basic question of whether Premium can be considered a bundle therefore remains in place while litigation continues.
Unclean hands defense stricken
The MLC prevailed on a separate issue. Spotify had accused the MLC of selectively targeting it while allegedly failing to pursue other streaming services over similar reporting practices.
Spotify argued that amounted to “unclean hands,” an equitable defense that can prevent a plaintiff from obtaining relief when its own misconduct is tied to the dispute.
Torres rejected the argument, finding no legal requirement that the MLC enforce Section 115 against every streaming service “in the same way, the same manner, and at the same time.” The court concluded Spotify’s defense “has no basis in law” and ordered it stricken.
Amended complaint shifts focus
The original lawsuit’s dismissal did not end the case. The MLC subsequently filed an amended complaint advancing different theories.
Rather than simply arguing Spotify cannot call Premium a bundle, the MLC now alleges Spotify improperly calculated the royalties owed on those bundles, including through the value assigned to Premium’s audiobook component.
Spotify has so far successfully defended the proposition that music plus audiobooks can qualify as a bundle under federal royalty rules. What remains unresolved is whether Spotify is calculating that bundle correctly and therefore paying the correct amount of mechanical royalties to songwriters and publishers.
