Mr Viral
The Spotify v. MLC lawsuit is only intensifying, referring now to an apparent discovery dispute. Photo Credit: Alexander Shatov
Just when you thought the Mechanical Licensing Collective (MLC) v. Spotify lawsuit couldn’t get any uglier, the two are now embroiled in a bitter discovery dispute. Both the MLC and the streaming platform illustrated the scope of this dispute today, in letters to the presiding judge about their respective qualms. For those who’ve been following the underlying courtroom confrontation even casually, these discovery hang-ups won’t come as a surprise.
We’ve provided more than a few updates – including on the plaintiff’s arguments, Spotify’s dismissal push, a retort to the latter, and much else – since the MLC submitted the suit five months ago.
Long story short, Spotify is paying materially less in U.S. mechanicals after abruptly deeming its main subscription packages bundles (and, for royalty-calculation purposes, reclassifying the involved accounts) owing to the addition of audiobook listening. In a nutshell, the Phonorecords IV determination for on-demand streaming treats bundled revenue far differently than it does revenue from standalone music-only packages.
The streaming giant says the move is above board, the MLC is adamant that the packages don’t constitute bundles, and millions in (allegedly unpaid) royalties are hanging in the balance as a result.
It’s against this backdrop that the MLC and Spotify are apparently locking horns over the precise scope of discovery. Beginning with the few details about which the parties are in agreement, counsel for the MLC and Spotify participated in a roughly two-hour Zoom meeting on September 18th, corresponded via writing multiple times thereafter, have evidently been unable to reach a compromise, and are consequently asking the court to weigh in.
“Yet Spotify has refused to produce any documents in response to many of the MLC’s requests,” the MLC’s legal team maintained in the relevant letter, “and has sought to unreasonably narrow other requests, all in an effort to avoid producing the very documents the MLC requires to support its claim.”
(Technically, both letters were penned and submitted jointly, but that centering on Spotify’s discovery requests bears the letterhead for the streaming platform’s attorneys, whereas the same is true, albeit for the MLC’s counsel, of the other document.)
The categories in which Spotify has allegedly “refused to produce any documents” include but aren’t limited to the decision-making process behind the audiobook and music-only plans’ launches as well as the actual revenue, subscribers, and profit associated with the audiobook tier.Of course, one needn’t stretch the imagination to see why the MLC, in arguing that audiobooks are of “token value,” wishes to obtain the performance details (on top of the “technical architecture” to boot) tied to the appropriate plan. Said plan costs $2 less per month than Individual in the States but, as it includes 15 hours of audiobooks access and no ad-free music support, is presumably finding few takers.
Meanwhile, Spotify has allegedly moved to limit the scope of discovery in different areas. Sticking with the streaming platform’s response as provided in the MLC’s letter, the defendant claimed in more words that it’d agreed to 53 of the over 60 requests at hand, besides lambasting these requests as an “extremely broad, invasive examination of a wide range of topics for a period of over three-and-a-half years.”
“Spotify has already agreed to take on a remarkable burden,” the defendant’s attorneys penned, “collecting and reviewing tens of thousands of documents (if not more). The MLC’s refusal to compromise on any of its requests is entirely unreasonable. … Spotify is hard-pressed to understand how documents related to wireframes or codebase have any bearing on whether audiobook streaming is a product or service distinct from music streaming that has more than token value.”
Shifting to Spotify’s letter to the court, the streaming service is of the belief that it’s entitled to internal communications between the MLC, music publishers, and the National Music Publishers’ Association (NMPA) itself. But the MLC has allegedly “refused to produce responsive documents, agreeing only to produce communications concerning Spotify’s reporting of Premium as a Bundle,” which is “insufficient.”
Certain other disputed requests (of 21 overall) from Spotify pertain to the internal MLC documents “that will speak directly to what MLC believes constitutes a Bundle and how it has treated other” streaming platforms with bundles in place.
As for the MLC’s position here, the entity’s counsel in more words said sufficient details had already been provided in the initial complaint and prior filings.
“Spotify claims it needs this extraordinarily broad and unduly burdensome discovery of its competitor’s reports and payment practices to understand the MLC’s position as to why Spotify’s Premium service does not qualify as a Bundle,” reads one such section. “But the MLC already has made its position on that subject abundantly clear, including in the Complaint and in its opposition to Spotify’s motion to dismiss.”
While it perhaps goes without saying, a near-term settlement doesn’t appear to be in the cards – though Spotify, as we previously noted, is still aggressively seeking dismissal.
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