Senators Marsha Blackburn and Ben Ray Luján bitterly criticized Spotify’s music-audiobooks bundling plan, which lowers royalties to songwriters and music publishers by hundreds of millions of dollars every year, in a letter released Friday asking the Federal Trade Commission to investigate the streaming giant.
In the letter, the senators say that the plan, launched last year — which substantially lowers royalty payments to songwriters and publishers by automatically shifting users to a plan that bundles music with the platform’s much-less popular audiobooks option — converts “all of its premium music subscribers into different — and ultimately higher-priced — bundled subscriptions without their knowledge or consent.” The bundle also made the company eligible for a lower mechanical royalty rate in the United States.
“These actions harm consumers,” the senators added, “and could deeply damage the marketplace and the music royalty system…. Bundled Premium Plans are apparently aimed at increasing [Spotify’s] profits, while lowering royalty payments to the creative community.”
“We urge the FTC to investigate the impact of Spotify’s recent actions, to take steps to protect Americans from being forced into subscriptions without notice or choice, and to safeguard the music marketplace,” it continues.
In the plan, Spotify automatically added 15 hours per month of audiobook streaming to its standard premium music subscription plans, then raised the premium subscription fee in the U.S. to $11.99 for individuals and $19.99 for families.
However, users must manually opt out of the plan, which the National Music Publishers Assn. estimates cost songwriters and publishers some $230 million last year alone, as announced at the organization’s annual membership meeting last month.
The Mechanical Licensing Commission sued Spotify over the plan last year, claiming that Spotify had “unilaterally and unlawfully” cut its music-royalty payments via the bundle, however a federal judge ruled that its move was supported by “unambiguous” regulations.
Spotify dialed back its efforts on the bundle slightly last year, as the senators’ letter notes: “After pushback, Spotify quietly re-launched a music-only paid service, now called a ‘Basic Plan.’ This plan, though, is only available to certain existing subscribers—not new subscribers. Additionally, Spotify 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’s millions of Premium Plan subscribers switched back to a music-only ‘Basic’ plan.
On Friday, a rep for Spotify referred Variety to its statement on the plan made last year, in which it said the company’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” as part of an effort to “provide consumers incredible value and a best-in-class experience.”
In a statement to Variety, NMPA president/CEO David Israelite said: “As we have said since they started their bundling scheme last year – Spotify’s forced conversion of subscribers doesn’t only hurt songwriters – it hurts consumers. We are extremely pleased that United States senators Blackburn and Lujan are also asking the FTC to investigate this as it will have ripple effects across other platforms. These unfair business practices hurt music creators and users and it must stop.”
Read the full article here
