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The National Music Publishers’ Association (NMPA) announced on Tuesday (Feb. 4) that it would issue takedown notices to Spotify for 2,500 podcast episodes on the platform that allegedly contain “unlicensed musical works” from 19 NMPA member publishers.
“Spotify has thousands of unlicensed songs in its podcasts, which it has done nothing to remedy. This takedown action comes as no surprise, we have warned of this issue for some time,” says NMPA president and CEO David Israelite of the takedown notices. According to the NMPA, this is just the start of the takedown requests, and the demands will continue to roll out.
This is the latest of many retaliatory actions the NMPA has taken against Spotify since last March, when Spotify significantly cut payments to NMPA’s members for premium subscriptions. By adding audiobooks into its premium subscription tiers, Spotify argued it qualified for a discounted royalty rate, known as “bundle,” given it would now have to pay for books and music from the same price tag that was once just for music. Israelite said at the time that he would “declare war” on Spotify for this move, and launched a number of actions to fight back.
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This included sending cease and desist notices for podcast and video content on its platform that were allegedly infringing on music IP; a legislative proposal, asking for the overhaul of the statutory license; complaints to the FTC and nine state attorneys general; and more. Around the same time, the Mechanical Licensing Collective (MLC) also fought back by filing a lawsuit against Spotify for the move to bundle premium subscriptions, calling it “unlawful.”
On Sunday, Jan. 26, the Spotify bundling issue was brought back into the headlines when Universal Music Group announced a new direct deal with Spotify which included changes both to the recorded music and publishing royalty rates. This marked the first direct deal between Spotify and a publisher since the passage of the Music Modernization Act (MMA), and sources close to the deal say that the agreement included improved remuneration for UMG’s publishing company, Universal Music Publishing Group, and its songwriters.
Still, all other publishers, most of which are members of the NMPA, remain on the baseline bundle rate. The NMPA told Billboard at the time that the deal was “good news for the entire industry” and that “a rising tide lifts all boats, and this signals that Spotify is coming back to the table,” but the organization also added it had no plans to stop any of the actions it had already set in motion against Spotify, and neither did the MLC.
A few days later, on Jan. 29, the MLC’s lawsuit against Spotify was dismissed, with a federal judge saying that Spotify’s move to bundling was supported by “unambiguous” regulations. The judge is not giving the MLC a chance to refile and said the law is clear. Still, if the MLC wants to, it can challenge the ruling at the federal appeals court.
These takedown requests make it clear that the NMPA is not ready to bury the hatchet with Spotify. Among the 2,500 takedown requests are podcasts that allegedly contain unlicensed musical works from publishers like ABKCO, Anthem Entertainment, Big Machine Music, BMG, Concord Music Publishing, Downtown Music Publishing, Hipgnosis Songs Group, Kobalt, Mayimba Music, peermusic, Primary Wave Music, Reservoir, The Royalty Network, Inc., Sony Music Publishing, Spirit Music Group, Ultra Music Publishing, Universal Music Publishing Group, Warner Chappell Music, and Wixen Music Publishing.
Israelite adds: “Podcasts are a growing source of revenue for songwriters and publishers, and it is essential that podcasts provide lawfully produced entertainment. This is not hard to do, and Spotify knows, and has known, how to fix this problem for their users. We hope podcast hosts will stand up for their fellow creators and demand that Spotify do better. Spotify will stop at nothing to undervalue songwriters on behalf of its bottom line. Look no further than its recent bundling scheme and its ill-conceived appeal of songwriters’ rate increase in CRB III. We will not stop until the platform fixes its podcast problem, and all other areas where songwriters are not earning what they deserve.”
Spotify added 35 million monthly active users in the fourth quarter last year — the most ever in a single quarter — bringing the total number of people streaming on the Swedish music and audiobook platform to 675 million, the company reported on Tuesday. Premium or paying subscribers totaled 263 million as of the end […]
Spotify’s share price continues to soar in 2025 following a massive gain in 2024, making the music streaming company’s $109.3 billion market capitalization worth about the same as every standalone, publicly traded music company from which it licenses music combined — with nearly enough left over to include concert promoter Live Nation.
Based on closing prices Monday (Feb. 3), Universal Music Group has a market cap — the value of outstanding shares — of $51.1 billion, amounting to less than half of Spotify’s. The other standalone, publicly traded “multi-sector” music companies covering record labels and music publishers total another $27.8 billion: Warner Music Group ($16.6 billion), HYBE ($6.5 billion), JYP Entertainment ($1.8 billion), Believe ($1.5 billion), SM Entertainment ($1.3 billion), YG Entertainment ($646 million), Reservoir Media ($522 million) and Avex ($421 million). That brings the multi-sector aggregate market cap to $80.4 billion. If you add Live Nation’s $33.6 billion market cap to the multi-sector group, the combined market cap exceeds Spotify by just $4.7 billion.
Additionally, if you add the market cap of Sony Music – which is part of the Sony Corp. conglomerate and doesn’t trade as a standalone company – to UMG and WMG’s, the three major music groups’ aggregate market cap isn’t much more than Spotify’s. Importantly, if Sony Music was independent of Sony Corp, its value would be comparable to that of UMG. In the past four quarters, the two companies have had almost equal revenues on a dollar basis — $11.6 billion for UMG to $11.59 billion for Sony Music. Assuming the companies have similar margins and growth prospects, Sony Music’s market cap could — but would not necessarily — equal UMG’s $51.1 billion. Add WMG, and the three majors have a combined market cap of $118.8 billion — just $9.5 billion more than Spotify’s market cap at the end of trading on Monday.
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This imbalance between Spotify and music companies’ values hasn’t always existed. A move into podcasting and a pandemic-led growth spurt pushed Spotify’s stock above $380 in February 2021. The frothy times didn’t last long, however. Investors who were previously attracted to streaming companies’ high growth rates eventually demanded more financial discipline. When Spotify shares fell to an all-time low of $69.29 on Nov. 4, 2022, its roughly $13.3 billion market cap was less than a third of UMG’s $40.9 billion. But layoffs and price increases turbocharged Spotify’s financial statements and sent its share price into a new stratosphere. In 2023, the company laid off roughly a quarter of its full-time staff and implemented the first of two price increases. In 2024, Spotify’s share price rose 138.1%. Last month, it jumped another 22.6%.
Today, Spotify’s market value puts it in a rarefied air amongst entertainment companies. Netflix — which has 302 million subscribers globally to Spotify’s 252 million, and much higher prices — currently has a market cap of $418.8 billion. Walt Disney, which spans streaming, cable TV networks and theme parks, is worth $206.1 billion. Sony Corp, a huge company that includes games, movies, TV and hardware, has a market cap of $133.7 billion. Telecommunications giant Comcast, owner of NBCUniversal and cable company Xfinity, is worth $126.7 billion. Spotify is worth more than Warner Bros. Discovery ($24.9 billion), sports gambling company DraftKings ($20.2 billion) and video game companies Nintendo ($87.6 billion), Roblox ($46.4 billion) and Electronic Arts ($32.2 billion).
In a banner week for music stocks, record labels and music publishers posted gains after Universal Music Group (UMG) signed a new licensing deal with Spotify and Amazon announced further price increases for its music streaming service.
UMG gained 11.2% to 26.94 euros ($27.91) after the company announced it renewed its licensing deal with Spotify for its record labels and music publishing. According to the company, the agreement will allow for “new paid subscription tiers,” such as Spotify’s anticipated high-priced superfan offering, and bundling of music and non-music content. UMG also got a boost from news that Amazon is raising prices on its Amazon Music Unlimited on-demand service in the U.S., U.K. and Canada. After the week’s gain, UMG had recovered nearly all of the 24% decline it suffered after its second-quarter earnings results showed lower-than-expected streaming growth.
Morgan Stanley analysts called it “an important and positive week” for investors in companies that operate in the music streaming space. Warner Music Group (WMG) rose 6.7% to $31.80 as investors likely assumed the company will follow UMG and negotiate a mutually beneficial licensing deal with Spotify later this year. Both Believe and Reservoir Media rose 2%.
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Spotify rose another 7.5% to a new record closing price of $548.55 after multiple analysts raised their price targets and the streaming giant emerged victorious in a U.S. court case over a tactic employed to lower its royalty obligations. The streaming company’s stock reached as high as $560.36 on Friday (Jan. 31), valuing the company’s market capitalization at approximately $111 billion. More analysts hiked their price targets ahead of Spotify’s earnings call on Tuesday (Feb. 4). Deutsche Bank increased its Spotify price target on Monday to $550 from $535, while Citi raised it to $540 from $500.
Music stocks have produced strong gains just one month into the new year. This week, the 20-company Billboard Global Music Index (BGMI) rose 6.4% to a record 2,447.97. Just two of the index’s 20 stocks lost ground while one was unchanged and 17 posted gains. The index’s third-straight weekly gain was the best of the year and the best single-week performance since the BGMI gained 6.8% in the week ended July 21, 2023. Just 31 days into 2025, the index is up 15.2% and is outpacing major indexes such as the Nasdaq composite (up 1.6%), S&P 500 (up 2.7%) and FTSE 100 (up 6.1%).
Aside from Spotify, other streaming companies posted large gains. LiveOne, the week’s greatest gainer, jumped 20.8% to $1.45 after CEO Robert Ellin announced — from President Trump’s The Mar-a-Lago Club — that LiveOne had surpassed 700,000 Tesla users, half of which are free, ad-supported users. Chinese music streaming company Cloud Music also improved, with its stock up 8.4% to 112.20 HKD ($14.40), after the company announced it had reached a “preliminary” agreement with K-pop company SM Entertainment to keep the K-pop company’s catalog at the platform. Paris-based Deezer rose 9.6% to 1.26 euros ($1.31). Abu Dhabi-based Anghami improved 4.2% to $0.75.
SiriusXM rose 9.3% to $24.01 after the company’s fourth-quarter earnings on Thursday (Jan. 30) showed a drop in revenue and subscribers but gross margins and earnings before interest, taxes, depreciation and amortization (EDITDA) that were in line with guidance. For full-year 2025, SiriusXM expects slight declines in both revenue and adjusted EBITDA but an increase in free cash flow to $1.15 billion from $1.02 billion in 2024. Ahead of the company’s earnings, Deutsche Bank lowered its price target to $25 from $28.
Sphere Entertainment Co. shares rose 8.5% to $46.60, with Guggenheim raising the company’s price target to $69 from $64 and maintaining its “buy” rating. Sister company MSG Entertainment, which will announce earnings on Thursday (Feb. 6), rose just 0.1% to $36.34.
iHeartMedia had the week’s largest decline, dropping 8.3% to $2.22, after posting gains in previous weeks. iHeartMedia shares are up 12.1% year to date.
January is not even over and 2025 already feels like a peak year for animosity toward Spotify — and that’s saying something given the criticism the company has attracted since emerging in 2008 as a potential savior for a piracy-riddled music industry. Even though music and commerce have always been uncomfortable partners in a marriage of necessity, the relationship has never been sourer.
Call it “the Spotify paradox.” Streaming — led by Spotify — has made the music business the biggest it’s been in 25 years, allowed unsigned artists to reach fans around the world, revived the popularity of local language music and enabled artists to sell their catalogs at valuations unthinkable a decade earlier — and yet discontent has never been greater. Industry revenues are soaring, but many artists and songwriters are struggling and angry.
Part of the disgruntlement can be explained by simple math. There are more songs by more artists chasing a finite amount of listeners’ attention. Spotify had a catalog of 35 million songs at the end of 2017, according to its F-1 filing. At the end of 2023 — the latest count available — Spotify had over 100 million tracks and 5 million podcasts. That’s nearly a threefold increase in catalog in just six years. And although its subscribers grew more than threefold to 236 million from 71 million over that time span, Spotify’s success at keeping its listeners engaged is such that the per-stream royalty — the metric people associate with economic health and fairness — is lower than that of its peers. (See Liz Dilts Marshall’s recent article that ranks streaming services by per-stream royalties, according to a report from catalog investor Duetti.) Global recorded music revenues have improved greatly over that time span, rising 81% to $28.6 billion in 2023 from $15.8 billion in 2017, according to the IFPI.
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But as industry revenues have consistently grown, individual artists — whose numbers are growing fast because barriers to entry no longer exist — don’t feel like they’re receiving a fair share of the bounty. Discontent is so noticeable because, in part, there are more artists to complain. Three decades ago, it required a record contract to enter the commercial music world. Today, anybody can do it. Luminate tracked an average of 99,000 new tracks uploaded to DSPs per day in 2024. That’s about 36 million new tracks competing for listeners’ attention each year. On Spotify alone, 5 million artists had a catalog of at least 100 tracks, according to the company’s latest Loud & Clear report.
Of course, per-stream payouts could be improved if Spotify encouraged people to listen less, thereby reducing the number of songs paid out from a fixed pool of money and raising the average per-stream royalty. With less music streamed, the average payout would shoot well beyond its current 0.3 cents per stream. But that would be counterproductive. In the streaming world, growth comes from keeping people engaged and, ultimately, turning them into paying subscribers. Turn away listeners and they could end up at social media platforms, where payouts are even skimpier, or broadcast radio, which pays artists and record labels nothing.
Many people see that royalties from purchases are fairer than streaming royalties, but listening and buying habits have changed how the money flows. As more people streamed more often, artists and songwriters received less money from old formats. In the fourth quarter of 2017, AM/FM radio accounted for 48% of Americans’ time spent listening to audio while streaming (including YouTube and podcasts) took a 26.5% share, according to Edison Research. By the fourth quarter of 2023, AM/FM commanded just a 36% share, while streaming (including podcasts) accounted for 45%. (Including audiobooks, which are both streamed and downloaded, that number rises to 48%.) Owned music’s share of listening — a.k.a. sales of CDs, vinyl and downloads, which fell sharply over that time span — dropped from 13% in 2017 to 4% in 2023. Also, in the streaming economy, new artists are competing for royalties with older songs. In the U.S. in 2024, catalog music (defined as more than 18 months old) accounted for 73.3% of total album equivalent consumption, according to Luminate.
Much of the discontent over Spotify, however, is less wonky and more human. The company’s actions have become widely seen as antithetical to the artists it claims to support. A turning point came in December when Harper’s ran an excerpt from Liz Pelly’s Mood Machine, a book that reveals, among other things, how Spotify bought music from nameless musicians to infuse some playlists — namely background music such as “chill” where brand names aren’t necessary — with cost-saving alternatives to professional musicians who would receive royalties for each stream. This alleged use of “fake” musicians has been reported in music circles for years, but Pelly’s book, in part because of its deep reporting and previously unknown details, captured mainstream attention rarely attained by a music industry topic that doesn’t involve Taylor Swift.
The Harper’s article, and Pelly’s ensuing book tour, spawned a flood of reviews and reaction articles about how Spotify devalues music, hurts artists, gives users a poor listening experience and is an algorithm-driven song-picker that provides its users only an illusion of choice. But the onslaught of Spotify coverage at old-school media is nothing compared to the countless videos uploaded to YouTube over the years. Enter a search phrase such as “Spotify hurts artists” or “Spotify royalties” and you can wade for hours through such topics as Spotify’s change in royalty payouts (“Spotify no longer paying artists for streams in 2024?”) and explainers on royalty accounting (“Spotify doesn’t pay artists….this is why”).
Contributing to the storm clouds was Spotify’s scheme to lower its royalties to songwriters and publishers. Last March, Spotify incensed the songwriting community when it adopted a lower mechanical royalty rate by contending its premium subscription tier’s music-and-audiobook offering qualified for a reduced royalty rate granted to bundles of digital services. Unsurprisingly, the publishing community, including numerous Grammy songwriter of the year nominees, said they wouldn’t attend Spotify’s Songwriter of the Year Grammy party, which ended up being canceled in the wake of the fires in Los Angeles. Earlier this week, a U.S. court agreed with Spotify, saying the federal royalty rules are “unambiguous” and rejecting the Mechanical Licensing Collective’s lawsuit arguing that Spotify was not actually offering a bundle of services.
Writing the biggest checks of any streaming service doesn’t get Spotify out of this paradox. This week, Spotify announced it paid $10 billion to the music industry in 2024, a tenfold increase from a decade earlier. That figure implies Spotify generated nearly 20% of the global music copyright, assuming 2024 saw an 8% increase from Will Page’s latest estimate of $45.5 billion in 2023. As Spotify’s payments to the music industry increased tenfold over the last decade, streaming’s growth helped compensate for declines in CD and download sales, and global recorded music revenues more than doubled from 2014 to 2024. But, again, aggregate industry gains don’t capture the experiences of individual artists who feel cheated by streaming economics.
Help could be on the way — someday. If it’s higher per-stream royalties artists want, then changing how royalties are calculated could make a difference. Currently, a streaming service pays royalties by divvying up all users’ subscription and advertising revenue amongst all the tracks streamed during a given month. Whether or not you listened to Taylor Swift, your subscription fees go into the same pile of money funded by Swift’s fans. An alternative method that has gained some traction is a user-centric approach that pays artists from each individual listener. Under this scheme, a listener’s subscription fees, or advertising revenue, goes only to the artists that person streamed. That’s a more favorable approach for album-oriented and niche artists and less appealing for popular songs that get repeat listens. So far, only SoundCloud has adopted the user-centric model.
Artists’ royalties also stand to benefit from efforts to clean up streaming services’ catalogs. Spotify and Deezer have signed on to Universal Music Group’s plan to reward professional musicians by demoting “functional” music and incentivizing distributors to crack down on fraud. Deezer has removed tens of millions of low-quality tracks, and anti-fraud measures may explain why the number of daily new tracks uploaded to streaming services fell about 4% in 2024, according to Luminate. But not all artists feel like they are benefiting from these changes. Spotify’s move to limit royalty payments to tracks with at least 1,000 streams was widely seen as harmful to developing artists (as seen in this column on the streaming threshold from Ari Herstand).
The Spotify paradox may never end, but artists can adjust to their new environment. In 2014, Swift’s catalog was removed from Spotify by her record label, Big Machine Label Group. Earlier that year, Swift had penned an op-ed for The Wall Street Journal that argued “music should not be free” and urged artists to “realize their worth and ask for it.” Her entire catalog returned to Spotify and other streaming platforms in 2017. Did the economics of streaming change during Swift’s three-year hiatus? No, not really. Licensing deals may have extracted marginally better terms for artists and record labels, but streaming royalties are still a fraction of a cent per stream. One thing that changed was that more of Swift’s fans became subscribers to Spotify, Apple Music (which launched in 2015) and other streaming platforms. Today, free streaming still exists, and a stream is still worth a fraction of a cent, but Swift is a case study in how to cultivate a vibrant streaming business while reviving the lost art of album sales.
On Sunday (Jan. 26), news broke that Universal Music Group and Spotify had struck a direct deal affecting both the company’s recorded music and publishing royalty payments. The recorded music side of the deal marked an important step forward in UMG’s so-called “Streaming 2.0” plan, but the publishing side of it is even more noteworthy.
This agreement represented the first direct deal between a music publisher and Spotify since the passage of the Music Modernization Act in 2019, and it effectively overrides the government-regulated statutory rate for mechanical royalties in the U.S. with a private deal between the two companies. While the jointly issued press release about it was vague on details, sources close to the deal say it offers better pay to UMPG and its songwriters than before, and it signals that Spotify might be ready to bury the hatchet with U.S. publishers overall. But it’s not over yet.
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First, the context: In March 2024, Spotify added audiobooks to its platform and reclassified its premium, duo and family subscription tiers as “bundles” in the U.S., a classification streamers can use to pay discounted mechanical royalty rates for musical works. This means that Spotify started splitting the money it once only paid to U.S. music rights holders to pay for both music and books, leading to a sudden and dramatic drop in mechanical streaming royalties. (At the time, Billboard estimated a decrease of $150 million in U.S. mechanical royalties for songwriters and publishers over the first 12 months of the new classification, compared to what they would have made had the tiers never been reclassified.)
This led to a nearly year-long war between the publishers and Spotify, led vigorously by the National Music Publishers’ Association (NMPA), which launched a multi-pronged retaliation against Spotify. In the months that followed, the NMPA sent Spotify cease and desist notices for podcast and video content on its platform that were allegedly infringing on music IP; submitted a legislative proposal, asking for the overhaul of the statutory license; sent complaints to the FTC and nine state attorneys general; and more. The Mechanical Licensing Collective jumped in too, suing Spotify in May for allegedly “unlawfully” changing its subscriptions to bundles.
Then, in a surprisingly-timed announcement, the MLC’s lawsuit against Spotify was dismissed this morning (Jan. 29) with a federal judge saying that Spotify’s move to bundling was supported by “unambiguous” regulations. This timing was good for Spotify. Had the ruling come down before the direct deal with UMPG, the outcry from publishers about it would have been far worse (not to say there won’t still be some outcry). The judge is not giving the MLC a chance to refile the case, saying the law is clear and that amending the accusations would be futile, although the MLC can challenge the ruling at the federal appeals court.
But since this ruling came after the UMPG news became public, publishers now have hope for another way out of the Spotify bundle: direct deals. Although sources close to the situation say they are not aware of any other negotiations going on between Spotify and other publishers to date, the other major publishers now have precedence to argue for similar deals with Spotify. The bigger question is what happens to the small indie players. Will they be subjected to the original bundle rate while the majors get better terms? Does this further the monetary divide between indie and major publishers? UMG is the world’s largest music company and the world’s second largest publisher, after all. Not everyone has that kind of leverage.
The NMPA told Billboard at the time of the UMG-Spotify deal that it was not making any changes to the moves it had already set in motion against Spotify — and neither was the MLC. (Of course, this all came before the MLC’s lawsuit was dismissed.) The NMPA struck a somewhat hopeful tone in a statement about the UMG-Spotify deal, saying it was “good news for the entire industry” and that “a rising tide lifts all boats, and this signals that Spotify is coming back to the table.”
The question remains, however, why Spotify came back to the table with UMG for a new publishing deal in the first place. Spotify had found a way to pay less for songs. Why did Spotify make this concession?
There are a few possible answers to that. For starters, the NMPA had essentially promised that, until Spotify relented on bundling, it would make any future moves the streamer wanted to make difficult. The NMPA’s cease and desist letter cited a Wall Street Journal report that Spotify eventually wanted to offer a “remix” feature to speed up, mash up and otherwise edit sound recordings; the NMPA warned that if Spotify released “any such feature … without the proper licenses in place from our members” it “may constitute additional direct infringement.” Given the NMPA’s overall tone throughout this letter, it seems clear that this was a warning to Spotify that it needed publishers’ cooperation for remix features.
Spotify has also teased other features that would require the platform to get new, voluntary licensing approval from the publishers. In October, Spotify began hosting music videos in 97 countries — but, notably, not in the United States. In November, Spotify CEO Daniel Ek teased the idea of a higher cost ultra-premium tier, including more offerings for top fans such as high fidelity listening and, vaguely, “a bunch of other things.” A few weeks ago, Spotify partnered with The Weeknd to stream his Billions Club Live show exclusively on the platform. By developing a solution with UMPG, and maybe other publishers in the future, Spotify is signaling that it is ready to make nice so that it can push forward with its plans for new products.
It also must be noted that all of these publishing companies, as well as Spotify, are global.
While the bundling situation is specific to the United States, UMPG and other publishers are negotiating with Spotify for licensing deals in multiple markets worldwide where publishers have room to negotiate. With UMG’s direct deal, UMPG and Spotify can move forward with their plans to grow their income and presence in emerging markets — something both Spotify and UMG shareholders are keen on — without wasting time and resources threatening each other in every new licensing conversation.
It turns out that playing nice is helpful for both parties — and the market is rewarding that. Since the announcement of their new direct deal, the share price of both companies saw a positive bump. Even Warner Music Group saw upward movement, since some analysts believe the UMG deal opens the door for other major music companies to do the same.
Though it constitutes a step in the right direction, only time will tell how, and if, other direct deals between Spotify and publishers develop, and if this might grow the chasm between majors and indies.
Spotify won a ruling Wednesday dismissing a lawsuit from the Mechanical Licensing Collective that accused the streamer of unfairly slashing royalty rates, with a federal judge ruling that Spotify’s move was supported by “unambiguous” regulations.
The MLC sued last year, claiming Spotify had “unilaterally and unlawfully” chosen to cut its music royalty payments nearly in half through bookmaking trickery – namely, by claiming that the addition of audiobooks to the platform entitled the company to pay a lower “bundled” rate.
But in her decision on Wednesday, Judge Analisa Torres said that federal royalty rate rules clearly allowed Spotify to legally claim the lower rate, rejecting MLC’s argument that the company was not actually offering a “bundle” of services.
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“Audiobook streaming is a product or service that is distinct from music streaming and has more than token value,” the judge wrote, alluding to the specific wording of the federal rule. “Premium is, therefore, properly categorized as a Bundle.”
A spokeswoman for the MLC did not immediately return a request for comment on the ruling.
The MLC, which collects streaming royalties for songwriters and publishers, filed its lawsuit in late May — a week after Billboard estimated that Spotify’s move would result in the company paying roughly $150 million less over the next year. In its complaint, the MLC claimed Spotify was “erroneously recharacterizing” the nature of its streaming services to secure the lower rate.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the group’s attorneys wrote at the time. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
At issue in the lawsuit is Spotify’s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it’s now entitled to pay a discounted “bundled” royalty rate under the federal legal settlement that governs how much streamers pay rightsholders.
In Wednesday’s ruling, Judge Torres agreed. She said the rules required only that Spotify offered a different service and that it provided users with more than “token value” – and that the addition of audiobooks was clearly covered by those terms.
MLC’s attorneys had argued that audiobooks were that kind of “token” non-factor, since Spotify didn’t raises prices when it added them and only a small proportion of subscribers actually listen to them. MLC had claimed Spotify added the books was merely a “pretext” to cut rates for music.
Spotify moved to dismiss the case in August, calling it “nonsensical” and “wasteful.” The company’s attorneys blasted the MLC’s argument that the audiobooks were aimed at a legal loophole, saying it “profoundly devalues the contributions of the tens of thousands of book authors.”
In her decision on Wednesday, Judge Torres sided with Spotify’s argument. Though she said the new offering might strike ordinary consumers as more of a “two-for-one deal” than a traditional bundle, she said Spotify’s addition of the books had clearly brought more than nominal value to its users.
“MLC cannot plausibly claim that having access to audiobooks is not something of intrinsic and monetary value to many, even if only a fraction of Spotify’s millions of Premium subscribers may take advantage of it,” the judge wrote. “The court can draw only one conclusion: that 15 hours of monthly audiobook streaming is a product or service that has more than token value.”
If anything, Judge Torres said, Spotify had “likely paid more in royalties to MLC than it was otherwise required to pay” because it did not immediately claim bundled status after introducing the audiobook feature.
In addition to dismissing the lawsuit, Judge Torres did not give MLC a chance to refile the case, saying the law was clear and that amending the accusations would be futile. The group can still challenge the ruling at a federal appeals court, however.
In a statement to Billboard on Wednesday, a Spotify spokesperson said the company was “pleased” with the court’s decision: “Bundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry. We know the regulations can be complex, but there’s plenty of room for collaboration—and our recent deal with [Universal Music Publishing Group] shows how direct licenses can create flexibility and additional benefits.”
Spotify paid $10 billion to music rights holders in 2024, according to a blog post published Tuesday (Jan. 29) from David Kaefer, the streamer’s vp/head of music business.
Last year, Spotify reported that it finished the third quarter of 2024 with 252 million subscribers. “Today, there are more than 500 million paying listeners across all music streaming services,” Kaefer writes. “A world with 1 billion paying listeners is a realistic goal.”
Spotify’s $10 billion payout, a new record for the company, is roughly 10 times as much as it shelled out to the music industry a decade ago. Kaefer says the streaming service has now contributed roughly $60 billion to the music industry since its founding.
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Also notable for Spotify in 2024 was CEO Daniel Ek‘s announcement to financial analysts in November that the company was “on track for our first full year of profitability.”
“We’re not here to merely optimize for today,” he added. “As you think about Spotify in 2025 and beyond, picture a company that operates with the same disciplined management you’ve seen this year, but one that also has the ambition to seize the opportunities presented by what’s happening in technology. In the near term, I see potential for transformative shifts in music discovery and new ways to connect artists and fans like never before.”
On Sunday (Jan. 26), Spotify announced that it had reached a new direct deal with Universal Music Group that will impact the company’s recorded and publishing royalty rates. “Constant innovation is key to making paid music subscriptions even more attractive to a broader audience of fans around the world,” Ek said in a statement regarding the news.
This sentiment was echoed in Kaefer’s blog post on Tuesday. “We offer an ad-supported free tier, while some services don’t,” he writes. “Beyond the ad dollars this generates, more than 60% of Premium subscribers were once free tier users. Bringing in users who don’t expect to pay for music, and deepening their engagement, means they’re more inclined to become subscribers in the future.”
“Onboarding people to paid streaming,” he continues, “is precisely what has increased our payouts — tenfold — over the past decade.”
Spotify will report its fourth-quarter earnings on Feb. 4.
Spotify general counsel Eve Konstan is exiting her role at the streaming giant “to step away from full-time corporate life,” she announced via LinkedIn on Monday (Jan. 27). “This marks the end of a chapter that’s been filled with unforgettable experiences and immense personal growth,” Konstan wrote, “and while it’s bittersweet to step away from […]
Bruno Mars is a history-making artist! The superstar is officially the first artist in Spotify history to reach 150 million monthly listeners, the streaming platform announced on Monday (Jan. 27). He is currently the number one artist on Spotify. Explore Explore See latest videos, charts and news See latest videos, charts and news The accomplishment […]