US collecting society The MLC has asked the judge that dismissed its big bundling lawsuit against Spotify to reconsider the case. Or, alternatively, to ‘vacate’ her judgement so that it can submit an amended lawsuit.
Judge Analisa Torres last month dismissed with prejudice the MLC’s claim that Spotify was wrong to reclassify its premium subscription product as a music + audiobooks bundle in order to reduce what it pays songwriters and music publishers under the US mechanical rights compulsory licence. The ‘with prejudice’ bit of the ruling means the MLC can’t file another lawsuit on this issue.
In a new legal filing this week, the MLC boldly declares that the “injustice will be manifest” if Torres’s ruling dismissing its lawsuit at this early stage, without the option to submit an amended complaint, remains in place.
Because at stake in this legal battle, it adds, is “an unprecedented interpretation of regulatory language that would have far-reaching and profound financial consequences on an entire creative industry, as well as for the federal statutory licensing scheme that underlies the collection and distribution of more than a billion dollars in mechanical royalties each year”.
Spotify reclassified its premium product as a music + audiobooks bundle last year, having added audiobooks access to its main subscription package in late 2023. That allows it to claim a bundling discount in the compulsory licence that the MLC administers.
That decision was widely condemned by songwriters and music publishers as a cynical move by Spotify to pay even less for the songs it streams. The MLC then argued that the streaming firm’s premium product doesn’t actually qualify for the bundling discount, which was the basis for its lawsuit.
In its latest legal filing, the MLC sets out various reasons for why Torres was wrong to dismiss its lawsuit, and therefore why she should reconsider the case, or at least allow the collecting society to have a second go at making its claims through the courts.
Among other things, the MLC returns to one of the key arguments in its original lawsuit: that for Spotify premium to qualify as a bundle under the compulsory licence, the audiobook content must have more than “token value”.
Spotify has been scathing about the suggestion that fifteen hours of audiobooks access doesn’t have more than token value. However, the MLC argues that the audiobooks have little value to consumers who signed up for a music service.
In its new legal filing, it notes that Torres previously decided that audiobooks “generally are products of value”. Which may be true in the abstract, but, the MLC argues, the judge failed to credit its position that
“audiobook listening” does “not have ‘more than token value’ to the tens of millions of premium subscribers who purchased the service to get access to unlimited, on-demand, ad-free music, not audiobook listening”.
In the context of its bid to have Torres reconsider her decision to dismiss its lawsuit, The MLC argues that its claim on the ‘more than token value’ point “raises factual issues that cannot be resolved” through summary judgement. Which means the judge’s decision to dismiss the lawsuit via summary judgement was in error.
If Torres won’t reconsider, the MLC adds, relevant legal procedures dictate that she should “nonetheless vacate the judgment” so that “the MLC has the opportunity to seek leave to amend its complaint”.
And so the big bundling bust up continues - even though both Universal Music and Warner Music have now negotiated direct deals with Spotify around their song catalogues in the US, circumventing the compulsory licence and removing the bundling discount problem.