A new lawsuit accuses Spotify of cheating songwriters in exchange for royalties

spotify Technology SA used a legalistic word change to justify cutting royalties to musicians and publishers, reducing the revenue on which royalties are based by almost 50%, according to a lawsuit filed by the group that collects its payments.

The change came in March, when Spotify added the word “bundled” to the description of its $10.99-per-month music streaming service, the Mechanical Licensing Collective said in its complaint. Nothing else “has actually changed about the Premium service,” according to the lawsuit filed Thursday in Manhattan federal court.

The collective is legally prohibited from disclosing how much Spotify’s royalties have decreased since March, but cited a Billboard story that estimated the loss would be about $150 million next year.

Spotify said it expects a “quick resolution” of the lawsuit, which concerns terms that publishers and streaming services “agreed to and entered into years ago.”

“Bundles were a critical component of this deal, and several DSPs include bundles as part of their mix of subscription offerings,” a Spotify spokesperson said in a statement. “Spotify paid a record amount to publishers and societies in 2023 and is on track to pay an even larger amount in 2024.”

The fight over aggregation between the streaming service and publishers resulted in a dispute over other issues.

The National Music Publishers’ Association on Wednesday sent a cease and desist letter to Spotify over products it claims are infringing on songwriters’ copyrights. The NMPA alleges that music videos, lyrics and podcasts on the platform use copyrighted music without proper permissions.

“Before Spotify’s betrayal, we might have been able to work together to resolve this issue, but they have chosen the difficult path by going after songwriters once again,” NMPA CEO David Israelite said in a statement. .

In response, a Spotify spokesperson called the letter a “press stunt full of false and misleading claims.”

Music and audiobook streaming companies like Spotify pay musicians and music publishers under a complex system established in 2018 by the Music Modernization Act of 2018. Under the system, streaming services pay less per stream — in other words , less so for creators and publishers — when their services are classified into packages.

Spotify’s Premium service, which wasn’t classified as a bundle before March 1, includes unlimited music downloads and 15 hours of audiobooks. It added the audiobook offering in November in the US without changing the $10.99 price.

The licensing collective is asking the court to order Spotify to stop classifying Premium as a bundled service and pay it for lost revenue.

Israelite praised Mechanical Licensing Collective for “not letting Spotify get away with its latest trick to pay creators less.”