Music streaming service Spotify has been hit with a class action lawsuit over its discontinued Car Thing device.
The lawsuit, filed Tuesday (May 28) in the US District Court for the Southern District of New York, alleges that Spotify misled consumers by selling a product they knew would become obsolete.
Launched in 2021 and made available in the US the following year, Spotify’s Car Thing was described as a “smart player from Spotify that fills your car with music, news, entertainment, talk, and more.”
However, Spotify announced it would stop making Car Thing in July 2022 due to factors such as pricing, inflationary pressures and supply chain difficulties.
“First, we tested a number of price points and we frankly haven’t seen the volume at the higher prices that would make the current product financially viable,” Spotify Chief Financial Officer Paul Vogel had said at the time.
“Second, rising inflation and component costs, coupled with the expanded lead time needed to order parts, has significantly altered the risk reward of continuing to lean into further product development,” the executive added.
“The goal of our Car Thing exploration in the US was to learn more about how people listen in the car. In July 2022, we announced we’d stop further production and now it’s time to say goodbye to the devices entirely.”
Spotify Spokesperson
Recently, the company confirmed existing devices will cease functioning entirely by December 9, 2024.
A Spotify spokesperson said in a statement to Ars Technica on Friday (May 24): “The goal of our Car Thing exploration in the US was to learn more about how people listen in the car. In July 2022, we announced we’d stop further production and now it’s time to say goodbye to the devices entirely.”
In response to this latest decision, a number of consumers who purchased the Car Thing hardware, a voice-controlled dashboard tablet, have sued Spotify, alleging that the company misled consumers by selling a product they knew would become obsolete.
In a complaint filed with the US District Court for the Southern District of New York on Tuesday (May 28), the plaintiffs alleged that Spotify “failed to disclose and actively concealed their intent to discontinue service to the product and/or their ability to externally discontinue usage of the products,” and that the company employed “deception, deceptive acts or practices, fraud, misrepresentations, or concealment” in connection with the sale of the Car Thing.
They argued that consumers who purchased the device “are left with nothing more than a paperweight that cost between $50 and $100.”
The buyers “would not have purchased a Car Thing if they knew that Spotify would stop supporting the product within just a few months or years of purchase,” the plaintiffs said in the complaint, which can be read in full here.
The buyers “would not have purchased a Car Thing if they knew that Spotify would stop supporting the product within just a few months or years of purchase.”
Class-action complaint against Spotify
The lawsuit, filed on behalf of multiple plaintiffs, seeks unspecified damages for all Car Thing purchasers.
The case marks the latest legal challenge for Spotify amid the streaming giant’s ongoing dispute over its move to bundle subscription services in the US. Spotify decided at the beginning of March to reclassify its Premium Individual, Duo, and Family subscription streaming plans as Bundled Subscription Offerings, as those plans now offer access to audiobooks.
The Mechanical Licensing Collective (The MLC), an organization created under the Music Modernization Act of 2018 to issue blanket mechanical licenses for qualified streaming services in the US, sued Spotify earlier in May, on the grounds that Spotify is allegedly underpaying royalties to songwriters and publishers as a result of the bundling of its services.
Additionally, the National Music Publishers Association (NMPA) has issued a cease-and-desist letter to Spotify on behalf of NMPA members for allegedly hosting unlicensed lyrics on its platform.
Most recently last week, amid the ongoing dispute with Spotify, the NMPA called on Congress to make a change to copyright law in the US that would give US music publishers the freedom to choose how their music is licensed to music streaming services. Payments to song rights owners are regulated under the Phonorecords IV agreement.
“Large, foreign-owned companies, like Spotify, should not enjoy unfair advantages over American songwriters because of outdated federal policy. By making one simple change, Congress can undo a more than 100-year old mistake in the compulsory license, and ensure songwriters and music creators continue to benefit from their creative efforts,” said David Israelite, President and CEO of NMPA.
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