Kate Mills 
May 18, 2024
Spotify has been sued in a New York federal court for allegedly underpaying songwriters, composers and publishers by tens of millions of dollars.
The lawsuit against Spotify US was filed on Thursday in New York by the Mechanical Licensing Collective (MLC), a non-profit organisation that collects and distributes royalties owed from music streaming services.
The suit alleged that Spotify on March 1, without advance notice, reclassified its paid subscription services results in a nearly 50% reduction in royalty payments to MLC.
MLC said: "The financial consequences of Spotify's failure to meet its statutory obligations are enormous for Songwriters and Music Publishers.
Read more: How to listen to audiobooks on Spotify
"If unchecked, the impact on Songwriters and Music Publishers of Spotify's unlawful underreporting could run into the hundreds of millions of dollars."
According to MLC, Spotify reclassified its Premium Individual, Duo and Family subscription streaming plans as Bundled Subscription Offerings because they now include audiobooks. Royalties paid on bundled services are significantly less.
MLC also said that Premium subscribers already had access to audiobooks and "nothing has been bundled with it."
"Premium is exactly the same service that Spotify offered to its subscribers before the launch of Audiobooks Access," it said.
"Concerns terms that publishers and streaming services agreed to and celebrated years ago", the Swedish company said in a statement.
Spotify said it paid a "record amount" in royalties last year and "is on track to pay out an even larger amount in 2024."
"We look forward to a swift resolution of this matter," Spotify said.
In a February announcement, Spotify revealed it distributed a record-breaking $9 billion in royalties to the music industry in 2023. Notably, independent artists claimed around $4.5 billion of that total.
