A federal judge has dismissed the bundling-focused copyright lawsuit that the Mechanical Licensing Collective filed against Spotify. Photo Credit: MLC
Looks like Spotify’s aggressive bundling strategy is here to stay: The streaming platform has resoundingly triumphed in a related lawsuit from the Mechanical Licensing Collective (MLC).
The presiding judge tossed that roughly eight-month-old legal action with prejudice today, after Spotify towards 2024’s beginning unilaterally reclassified its existing U.S. subscriptions as music and audiobook bundles.
And as most in the music space know, that seemingly minor maneuver is having a decidedly massive impact on compositional royalties. In short – and as broken down in detail by DMN Pro – bundled revenue is treated a lot differently than revenue attached to standalone music plans.
At present, DMN Pro data shows that bundles account for over 99% of Spotify’s subscriptions in the U.S. – with the resulting royalty savings having cracked a total of $100 million in a matter of months.
Unsurprisingly, Spotify’s bundling bonanza is eliciting pushback on multiple fronts, including firmly worded criticism from the NMPA and, in the current year, a songwriter boycott of the platform’s Grammy party. (Along with most but not all other 2025 Grammy parties, the latter was subsequently shelved due to the LA wildfires.)
But it was the Mechanical Licensing Collective that promptly fired off a lawsuit alleging Section 115 violations and, in turn, demanding millions in additional mechanicals from Spotify.
The MLC further argued that the joint music and audiobook offerings didn’t constitute bundles at all, in large part because of audiobooks’ alleged “token value” and failure to represent a distinct product, we covered at length in 2024.
But Judge Analisa Torres has granted Spotify’s dismissal motion and rather definitively agreed with the platform’s view.
“The Court finds that § 115 and its implementing regulations are unambiguous,” Judge Torres spelled out in her opinion, “and that the only plausible application of the law supports Spotify’s position.
“Under the facts as alleged,” the court continued, “audiobook streaming is a product or service that is distinct from music streaming and has more than token value. Premium is, therefore, properly categorized as a Bundle, and the allegations of the complaint do not plausibly suggest otherwise.”
A portion of the MLC’s arguments concerned the fact that Spotify had initially added audiobook access to Premium in November 2023 – well before the bundling shift was made official in pricing and royalty statements. But as the judge sees things, the timing at hand is of no consequence here.
“That Spotify did not immediately report Premium as a Bundle to MLC in November 2023 although it could have,” Judge Torres found, “and thus likely paid more in royalties to MLC than it was otherwise required to pay, does not mean that Spotify’s later decision to reclassify Premium as a Bundle is invalid.”
Also irrelevant is the number of subscribers accessing audiobooks, per the judge, who ultimately tied this and adjacent determinations back to “the words of the regulation” in question.
“In effect,” Judge Torres indicated, “MLC asks the Court to interpret the undefined phrase ‘token value’ in a manner that will force Bundle, a defined term, to reflect that term’s ordinary and natural meaning. This the Court cannot do. … Although the Court agrees with the premise of MLC’s argument that the regulations define Bundle in a manner that encompasses more than what an ordinary consumer might consider a ‘bundle’ to be, the Court cannot disturb the words of the regulation as they are defined.”
Looking ahead to the remainder of 2025 and beyond, it’ll certainly be worth monitoring the decision’s impact on negotiations and other streaming platforms’ bundling classifications.
As we previously noted, from a legal perspective, there’s seemingly nothing stopping Apple Music (which, among other things, affords subscribers Apple Music Classical access at no additional cost) from taking a similar step. And this past November, Amazon Music conspicuously integrated Audible (and specifically one audiobook per month); now the service has an “artist-centric” pact in place with Universal Music.
More immediately, Spotify touted today’s ruling and emphasized its recent direct deal with Universal Music Publishing Group.
“We are pleased with this outcome,” Spotify told DMN, “which demonstrates that, after careful review by the court, Spotify’s Premium service is appropriately categorized as a bundle and offers valuable content alongside music.
“Bundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry. We know the regulations can be complex, but there’s plenty of room for collaboration—and our recent deal with UMPG shows how direct licenses can create flexibility and additional benefits,” concluded the service, which appears to be plotting a “Courses” buildout in the U.S.