U.S. Judge Issues Mixed Ruling in Spotify-MLC Royalty Dispute

On September 1 2026, U.S. District Judge Analisa Torres delivered a decision that kept Spotify’s Premium plans in the bundle category while striking down the streaming giant’s unclean‑hands defense.

The ruling preserves Spotify’s classification of its Premium Individual, Duo and Family subscriptions as a “bundle” that includes 15 hours of audiobook listening per month. Under federal mechanical‑royalty rules, revenue from a bundle must be split among its components, a split that can shrink the pool of money available for music royalties. By treating the audiobook portion as part of the bundle, Spotify can assign a portion of the subscription fee to audiobooks before the mechanical‑royalty calculation for music is applied.

In January 2025, Judge Torres had already found that Spotify’s Premium plans qualify as bundles because subscribers receive music together with a non‑token‑value service—15 hours of audiobooks per month. The Mechanical Licensing Collective (MLC) sought an interlocutory appeal of that decision, but Torres denied the request, noting that the MLC had not demonstrated a sufficient disagreement with the law to warrant a mid‑case appeal. Consequently, Spotify retains the legal victory that its Premium plans can be treated as bundles.

Separately, the MLC challenged Spotify’s claim of “unclean hands,” arguing that the regulator had singled out Spotify while overlooking similar reporting practices by other streaming services. Torres rejected that defense, finding no legal basis for the MLC to enforce Section 115 of the Copyright Act against all streaming services in the same manner, and ordered the unclean‑hands defense to be stricken.

The dismissal of the original lawsuit did not end the litigation. The MLC filed an amended complaint that shifted the focus from bundle classification to the calculation of royalties owed on those bundles. The new complaint alleges that Spotify improperly calculated the value assigned to the audiobook component, potentially reducing the mechanical‑royalty pool for songwriters and publishers.

Thus, the current legal question is whether Spotify is correctly valuing the bundle and, by extension, paying the appropriate amount of mechanical royalties. The MLC’s amended complaint introduces new theories that could prompt further court rulings.

The case carries significant implications for the streaming industry. If the court finds Spotify’s bundle calculations to be incorrect, other services—such as Apple Music, Amazon Music and Tidal—may need to reassess how they report bundled services and compute royalties. The dispute also underscores the role of the MLC, a nonprofit established under the Music Modernization Act of 2018, in overseeing blanket mechanical licenses for U.S. streaming platforms.

Industry observers note that, as of June 2024, nearly 97 % of Spotify subscriptions in the United States were classified as bundles, a shift that has already impacted royalty payouts. Spotify’s audiobook revenue has grown rapidly, with the platform reporting a 60 % year‑over‑year increase in audiobook listening hours in May 2023 and a projected $100 million in annualized recurring revenue from the audiobook segment.

For songwriters and publishers, the outcome of the MLC’s amended complaint will determine whether they receive the full mechanical‑royalty share they are entitled to under federal law. The decision will also influence how streaming services structure their subscription offerings and report revenue to the MLC.

The court’s mixed ruling leaves the case open for further proceedings. Both parties are likely to file additional motions as the litigation progresses. The next significant development will be the court’s response to the MLC’s amended complaint and any subsequent rulings on the calculation of bundle royalties.