The move\u00a0controversially resulted in Spotify\u00a0paying a lower mechanical royalty rate to publishers and songwriters in the United States.<\/a><\/p>\n That\u2019s because, under a\u00a02022 legal settlement<\/a>\u00a0called Phonorecords IV, music publishers and music streaming services agreed that \u2018bundle\u2019 services in the United States are permitted to pay a lower mechanical royalty rate to publishers and songwriters than standalone music subscription services.<\/p>\n In May last year, the Mechanical Licensing Collective<\/b> (MLC) sued<\/a> Spotify for allegedly underpaying royalties to songwriters and publishers after reclassifying its Premium Individual, Duo, and Family subscription streaming plans as Bundled Subscription Offerings because those plans now offer access to audiobooks.<\/p>\n The lawsuit was\u00a0dismissed<\/a>\u00a0in January, and the MLC asked<\/a> the court in February to reconsider the dismissal.<\/p>\n On Friday (June 20), Senators Marsha Blackburn<\/b>, a Tennessee Republican, and Ben Ray Luj\u00e1n<\/b>, a New Mexico Democrat, sent a letter<\/a> to Federal Trade Commission <\/b>Chairman Andrew Ferguson<\/b>, requesting an investigation into Spotify\u2019s bundling practice.<\/p>\n They wrote: \u201cWe have serious concerns about Spotify\u2019s recent move to convert all of its premium music subscribers into different\u2014and ultimately higher-priced \u2014 bundled subscriptions without their knowledge or consent.\u201d<\/p>\n \u201cThese actions harm consumers and could deeply damage the marketplace and the music royalty system. We urge the FTC to investigate the impact of Spotify\u2019s recent actions.”<\/p>\n Marsha Blackburn and Ben Ray Luj\u00e1n, US Senators<\/b><\/span><\/p>\n<\/blockquote>\n The letter added: \u201cThese actions harm consumers and could deeply damage the marketplace and the music royalty system. We urge the FTC to investigate the impact of Spotify\u2019s recent actions, to take steps to protect Americans from being forced into subscriptions without notice or choice, and to safeguard the music marketplace.\u201d<\/p>\n The senators allege Spotify \u201cexploited\u201d federal copyright regulations by automatically converting Premium subscribers into bundled plans that include audiobooks without consumers\u2019 consent or notice. This allowed the platform to pay a lower music royalty rate, they wrote.<\/p>\n \u201cSpotify\u2019s intent seems clear\u2014to slash the statutory royalties it pays to songwriters and music publishers. Not only has this harmed our creative community, but this action has also harmed consumers.\u201d<\/p>\n \u201cSpotify\u2019s intent seems clear \u2014 to slash the statutory royalties it pays to songwriters and music publishers. Not only has this harmed our creative community, but this action has also harmed consumers.\u201d<\/p>\n Marsha Blackburn and Ben Ray Luj\u00e1n, US Senators<\/b><\/span><\/p><\/blockquote>\n Earlier this month, the National Music Publishers\u2019 Association<\/b> said<\/a> Spotify\u2018s decision to reclassify its premium music service as a bundled offering, has, \u201cby Spotify\u2019s own numbers\u201d resulted in a $230 million<\/b> loss for publishers during its first year of implementation.<\/p>\n The NMPA projects that music publishers will \u201close over $3.1 billion<\/b>\u201d through 2032 due to Spotify\u2018s bundling practice.<\/p>\n The senators allege that Spotify\u2019s audiobooks service \u201cis set at an artificially high price for the purpose of gaming federal regulations and deeply cutting music royalty payments.\u201d<\/p>\n Spotify’s standalone Audiobook Access<\/b> plan costs $9.99 <\/b>monthly for 15 hours of listening from a catalog of 200,000<\/b> titles, while its music-only Basic Plan <\/b>provides unlimited access to over 100 million<\/b> songs for just $10.99<\/b>.<\/p>\n The senators wrote: \u201cUnder the regulations, the higher the Audiobooks Access plan is priced, the lower the music royalty Spotify must pay. Additionally, Spotify\u2019s licenses for audiobooks are consumption-based, so Spotify has little downside if the Audiobooks Access plan is overpriced.<\/p>\n Their letter added that, following “pushback” last year, Spotify “quietly re-launched” a music-only subscription option called the Basic Plan. However, Senators Blackburn and Luj\u00e1n said this tier is only available to certain existing subscribers, not new subscribers.<\/p>\n \u201c[Spotify’s] approach to expanding its offering and raising prices is industry standard. We notify users a month in advance of any price increases and offer easy cancellations as well as multiple plans for users to consider.”<\/p>\n Spotify representative<\/span><\/p><\/blockquote>\n They wrote: \u201cSpotify has hidden the Basic Plan so that existing subscribers must jump through endless hoops to find the option. As of January 2025, only a handful of Spotify\u2019s millions of Premium Plan subscribers switched back to a music-only \u2018Basic\u2019 plan.\u201d<\/p>\n A Spotify representative issued a response<\/a> via Variety<\/i> on Friday, saying the company\u2019s \u201capproach to expanding its offering and raising prices is industry standard”\u00a0 and that it “notif[ies] users a month in advance of any price increases and offer easy cancellations as well as multiple plans for users to consider\u201d as part of an effort to \u201cprovide consumers incredible value and a best-in-class experience\u201d.<\/p>\n The senators’ intervention represents the latest bipartisan action over Spotify\u2019s bundling practice. Last year, Blackburn was joined<\/a> by Democrat Congressmen Ted Lieu<\/b> and Adam Schiff<\/b> in writing a letter addressed to Shira Perlmutter<\/b>, the US Register of Copyrights<\/b>, raising questions about whether Spotify\u2019s move is in line with the spirit of the Music Modernization Act (MMA) of 2018<\/b>.<\/p>\n \u201cFew would expect customers to purchase audiobooks at that rate when it is available for free with the music service for only $1 <\/b>more per month. This was, however, the same moment in which Spotify automatically reclassified the 50 million <\/b>subscribers in its music services into a bundle,\u201d they wrote at the time.<\/p>\n \n
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