Audio and Music streaming and media service provider, Spotify has been sued in a US federal court for allegedly underpaying songwriters, composers and publishers by millions of dollars.
The lawsuit against the music distribution company was filed in the US state of New York on Thursday by the Mechanical Licensing Collective (MLC), a non-profit that collects and distributes royalties owed from music streaming services.
According to the suit, Spotify on March 1, without advance notice, reclassified its paid subscription services, resulting in a nearly 50 percent 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.
“If unchecked, the impact on Songwriters and Music Publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.” MLC said.
MLC further detailed that Spotify reclassified its Premium Individual, Duo and Family subscription streaming plans as Bundled Subscription Offerings, citing their inclusion of audiobooks resulting to royalties paid on bundled services significantly reduced.
Spotify had in February this year, said it paid $9 billion to musicians and publishers last year, about half of which went to independent artists.
According to MLC, 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.
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