Digital music streaming service Spotify has been sued for allegations of unpaid tens of millions of dollars to its customers.

The Mechanical Licensing Collective (MLC) on Thursday, filed the lawsuit against Spotify USA in New York. It owes royalties from music streaming services.

It is alleged that the platform reclassified its paid subscriptions services on March 1, without advanced notice. This resulted to about 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,” said MCL.

“If unchecked, the impact on Songwriters and Music Publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.” MCL stated.

As claimed by MLC, Spotify reclassified its Premium Individual, Duo and Family subscription streaming plans as Bundled Subscription Offerings because those plans now offer access to audiobooks.

The organization said that the music streaming platform had already offered Premium to its subscribers before the launch of Audiobook access and that nothing has been bundled with it.

“Premium is exactly the same service that Spotify offered to its subscribers before the launch of Audiobooks Access. Nothing has been bundled with it”. MLC said.

Subscribers could listen to add free music and up to 15 hours of audiobooks each month in return for a $10.99 monthly payment. They could also listen to other non-music audio content available on Spotify such as podcasts, comedy shows and spoken word performances.

“The lawsuit concern terms that publishers and streaming services agreed to and celebrated years ago.” The music streaming platform said in a statement,

“Nothing changed on the day Audiobooks Access launched: Premium subscribers continue to get the same single product, providing the same on-demand access to tens of millions of musical works”.

The non-profit is seeking a clear reporting and affiliated unpaid royalties dating back to March 2024, along with an order adhering to rules going forward.

“The MLC takes seriously its legal responsibility to take action on behalf of our members when we believe usage reporting and royalty payments are materially incorrect.” Kris Ahrend, The MLC.

A Spotify spokesperson said: “Spotify paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024. We look forward to a swift resolution of this matter.”

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