MUSIC STREAMING GIANT Spotify has been sued in a US federal court for allegedly underpaying songwriters, composers and publishers by tens of millions of dollars.
The lawsuit against Spotify USA was filed in New York yesterday by the Mechanical Licensing Collective (MLC), a non-profit that collects and distributes royalties owed from music streaming services.
The suit alleges that Spotify on 1 March, without advance notice, reclassified its paid subscription services, resulting in a nearly 50% reduction in royalty payments to MLC.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for Songwriters and Music Publishers,” MLC said.
“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 said 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.
In February, Spotify said it paid $9 billion to musicians and publishers last year, about half of which went to independent artists.
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