Most early poetry was sung, and we're fine with calling that literature. Calling Dylan's work poetry does step over some normative lines, but they're fairly arbitrary lines.

I know you were being sarcastic, but your comparison isn't really apt. Novels are not a lyric medium: they're prose. Song lyrics are lyrics set to music. Some poetry is "lyrics" without the music (although lyric poetry is not quite the same thing).

I think the contention is that lyrics and novels are non-overlapping subsets of literature.

Songwriting clearly doesn't include novels. Literature includes both, and more.

If they have a tune and you can dance to them.

Spoken word does exist. You're just drawing up arbitrary lines when in real life boundaries between media and genre aren't so distinct.