Spotify is putting songwriters in the spotlight this week with its first Songwriters to Watch list. Behind the scenes, a legal battle is intensifying over whether the company is paying them fairly.
The Mechanical Licensing Collective is seeking an immediate appeal of a court ruling in its legal battle with Spotify over audiobook bundling and royalty payments.
In November, The MLC sent a pre-motion letter to Judge Analisa Torres announcing its intention to request a so-called ‘interlocutory appeal’, a rare type of immediate review that would allow the organization to challenge the judge’s January 29, 2025 dismissal of its original claim before the full case is resolved.
The request triggered a sharp procedural battle. In a 33-page opposition filed January 9, which you can read here, Spotify argued that The MLC waited nearly a year too long to request this type of expedited review and fails to meet the legal requirements for an immediate appeal.
The MLC explained its position in a statement sent to MBW: “In September, the district court granted The MLC’s motion for reconsideration and reinstated our case against Spotify, recognizing that we had raised multiple plausible claims. However, the Court also upheld its earlier ruling dismissing our original claims related to Spotify’s recharacterization of its Premium offerings as Bundles.
“We are now seeking leave to appeal that earlier ruling immediately because of the significant impact that ruling is already having on rightsholders and the fact that the bundling issue has not yet been reviewed by any appellate court.”
How the dispute began
The conflict between The MLC and Spotify traces back to March 2024, when Spotify reclassified its Premium subscription tiers as “bundles” after adding 15 hours of audiobook access each month. The move controversially resulted in Spotify paying a lower mechanical royalty rate to publishers and songwriters in the United States.
Spotify’s reclassification stemmed from a 2022 US Copyright Royalty Board settlement known as “Phonorecords IV,” which established that bundled multimedia services could pay a lower mechanical royalty rate than standalone music subscription services.
The MLC, designated by the US Copyright Office to administer the blanket compulsory mechanical license, sued Spotify in May 2024, alleging the platform was illegally underpaying royalties to songwriters and publishers. Judge Torres dismissed the lawsuit in January 2025, holding that Premium qualifies as a Bundle under the regulations.
The following month, The MLC asked the judge to reconsider and sought permission to file an amended complaint. Following a September court order that allowed the case to proceed with modified claims, The MLC filed its amended complaint on October 1.
As MBW reported in October, The MLC’s amended complaint advanced two new theories: that Spotify improperly valued its standalone Audiobooks Access service when calculating bundle royalties, and that Audiobooks Access itself should be classified as a bundle.
Both sides make their case
The MLC added in its statement that “an immediate appeal serves the interests of all stakeholders by minimizing unnecessary litigation costs and delays, while ensuring that the critical legal questions at the heart of this case receive prompt appellate review”.
The statement continued: “Obtaining clarity on these issues is central to The MLC’s statutory responsibilities to enforce the rights and obligations under the Section 115 blanket license. We remain confident in the merit of our claims and committed to ensuring songwriters and publishers receive the royalties they are rightfully owed under the law.”
A Spotify spokesperson countered: “MLC falls far short of meeting the demanding standard required to justify the extraordinary step of certifying a decision for early appeal. MLC should not be rewarded for a strategy that has needlessly prolonged these proceedings, cycling through amended claims and extensive motion practice, only to seek leave to appeal nearly a year after its original claims were rejected.”
The legal arguments
In its November 17 letter, The MLC argued that this is a “novel question of regulatory interpretation” never addressed by any court. Crucially, The MLC revealed it intends to appeal “regardless of the outcome” of its amended claims, arguing it makes sense to resolve all issues together.
The MLC also cited a June 2024 letter from lawmakers who co-sponsored the Music Modernization Act, calling Spotify’s classification a “manipulation of statutory rates to slash royalties.”
In its January 9 opposition, Spotify argued: “Almost a year ago, this Court rejected the sole claim brought by [The MLC] in its original complaint. MLC could have immediately appealed that decision as a matter of right. It did not.”
Spotify contends Judge Torres found the regulations “unambiguous” and that an interlocutory appeal would force parties to “simultaneously litigate” in two courts, creating “piecemeal litigation.”
The timing dispute
The MLC argued it was in procedural limbo because the court could have denied its amendment request at any time, giving it automatic appeal rights. Section 1292(b) “sets no deadline for certification,” the organization noted.
Spotify countered that judges routinely deny such requests after delays of one to six months, calling The MLC’s 10-month wait unreasonable.
All three majors have now inked direct publishing agreements with Spotify that move beyond the traditional CRB model in the US. Spotify signed with Sony Music Publishing in September.
Universal Music Publishing Group and Warner Chappell Music signed direct licensing deals with Spotify in January and February, respectively, that override the CRB bundling discount.
Spotify also signed a direct licensing deal with Kobalt covering the US in August.
The streaming company noted in a regulatory filing in August that if the MLC were “entirely successful in its case, the additional royalties that would be due in relation to the period March 1, 2024, to June 30, 2025, would be approximately €256 million” (roughly $290 million), plus potentially penalties and interest.
Judge Torres has not yet ruled on The MLC’s request.
Music Business Worldwide
