US collecting society the MLC has responded to the letter Spotify sent a US court last week in the ongoing dispute over the streaming service’s bundling tactics.
The MLC has sued Spotify in a legal battle that centres on whether or not the fifteen hours of audiobook access Spotify now provides its premium users has more than ‘token value’. In its own letter to the court, the MLC says that Spotify’s insistence that Americans pay over $2 billion a year for audiobooks annually, demonstrating the value of audiobooks, is irrelevant.
Spotify, it adds, has provided “no information at all as to whether Spotify Premium subscribers consider the addition of audiobook access to have ‘more than token value’ in the context of the tens of millions of songs they already are receiving on-demand”. And that is what really matters.
The bundling dispute follows Spotify’s decision to reclassify its premium subscription product as a music + audiobooks bundle, based on which it has significantly reduced its payments to songwriters and music publishers in the US. The MLC claims that Spotify is wrong to reclassify its product in that way and has sued the streaming service.
In its recent letter to the court, Spotify set out arguments for why the MLC’s lawsuit should be dismissed. In its response, the MLC restates its case for why Spotify’s main subscription product should not be classified as a bundle, and also raises some legal technicalities over the arguments for dismissal.
Spotify decided that its main subscription product was a music + audiobooks bundle in March, having added the audiobooks access last year. That means it now benefits from a bundling discount under the MLC-administered compulsory licence which sets out what streaming services must pay writers and publishers in the US.
To qualify as a bundle under the compulsory licence, whatever a service provides beyond music must have “more than token value”. Which is why the value of audiobooks access to Spotify subscribers is key to this dispute. The MLC insists that the audiobook access does not have more than token value, a position that Spotify reckons is absurd.
In its letter last week, Spotify pointed out that Americans pay over $2 billion a year for audiobooks annually, with Amazon’s Audible service alone generating more than $1 billion in US revenues from two subscription tiers priced at $7.95 and $14.95 respectively. Therefore Spotify providing its users with access to 200,000 audiobooks has “obvious and significant independent value”.
However, in its new letter, the MLC stresses that Spotify subscribers didn’t ask for audiobook access, which was initially added to the streaming’s service premium subscription product at no extra cost. And it has failed to demonstrate that its subscribers value the audiobook access.
It goes on, “even if Spotify could establish that some of its tens of millions of subscribers value audiobooks, that still would not be dispositive of the question of whether audiobooks have more than token value either to Spotify or the vast bulk of Spotify's subscribers, who - as the complaint alleges - sign up for the service because of the music”.
And so the debate over the value of audiobooks on Spotify rolls on. Although, the MLC is keen to stress, the proper forum for that debate is in court, not in a back and forth between parties about a motion to dismiss.
When considering motions for dismissal, it adds, the court’s job is to assess “the legal feasibility of the complaint”, not “the weight of the evidence”. And the MLC’s lawsuit, it reckons, “plainly satisfies” the legal feasibility requirement, meaning the motion for dismissal should be rejected.