May 17th | MLC vs SPOT, Tencent's big year, Udio's Output

Alright on to the news.

Spotify Sued by The MLC for Cutting Pay Rate to Songwriters via Premium Bundles

In a surprising twist, theThe Mechanical Licensing Collective(MLC) has taken legal action againstSpotifyfor allegedly underpaying songwriters and publishers. The lawsuit was filed in response to Spotify’s recent reclassification of its Premium subscription plans to bundled offerings, a move that will cut the mechanical royalty rates that it pays to rights-holders nearly in half. Spotify’s reclassification was linked to the inclusion of audiobooks, but the MLC argues the service has remained unchanged, suggesting Spotify's move is a strategy to pay less in royalties.

For indie artists and songwriters, this legal showdown is another battle in the ongoing struggle to secure fair compensation. Lower mechanical royalty rates mean less income for the creators who fuel platforms like Spotify. While it might seem like a distant legal squabble, the outcome could set significant precedents affecting how streaming services classify and pay for music content.

That said, I think it’s likely that many artists listening to this podcast are unaware of what a mechanical royalty is, or how they collect it. Mechanical royalties are a publishing royalty paid out every time a digital or physical reproduction of a composition is produced. Unless you’ve opted into a publishing administration agreement with an aggregator likeTuneCore, are aSentricorSongtrustclient, or if your label is collecting it, it’s likely that you’re not collecting this royalty anyway. This is not a public performance royalty so it will not come through your PRO. So, if you’re a songwriter, and you don’t collect mechanicals, get signed up with Sentric and Songtrust to maximize your revenue. If you do, then pay attention to this lawsuit as its outcome could determine how much you get paid.

Tencent Music’s Subscription Revenues Increase 39% to $500M in Q1 as Paying Subs Hit 113.5M

Tencent’s success story highlights the power of strategic marketing and diversified content offerings. As indie artists, there’s a lot to learn from TME’s approach to increasing user engagement and willingness to pay for premium services. With the global music market becoming increasingly interconnected, trends in one region can often signal broader shifts.

Take a page from Tencent’s playbook—invest in creating exclusive content and engaging experiences for your fans. Membership models, fan clubs, and special content can boost your income and create a loyal fan base. Also, don’t shy away from international markets. Platforms like Tencent could be a valuable avenue for reaching new audiences.

Udio Spits Out 10 Songs a Second

AI-generated music presents both opportunities and challenges for independent artists. While it opens new possibilities for collaboration and innovation like in the case of GrimesAI, products like Udio are water-logging an already saturated market, making it harder for individual tracks and artists to stand out. Moreover, the legal and ethical implications of AI-created content using existing music frameworks are still evolving.

Ok everybody that’s about it for our newsletter, but before we hop off, I’d like to ask you to think of one person who might benefit from these discussions. Send them a link subscribe and let me know what you’d like to hear more of in the comment section.