Apr 26, 2024 2 min read

Indie publishers hit out at Spotify’s bundling trick to lower songwriter payments

It recently emerged that Spotify was reclassifying its main premium subscription product as a bundle, because of the audiobooks, which means it can pay a lower song royalty rate under the compulsory licence in the US. A group of independent music publishers has now criticised that move

Indie publishers hit out at Spotify’s bundling trick to lower songwriter payments

A group of independent music publishers has hit out at Spotify’s sneaky trick of reclassifying its main premium subscription product as a ‘bundle’ in order to reduce the royalties it has to pay publishers and songwriters in the US. 

“Subscribers to the premium service expect Spotify to pay songwriters their fair share of any royalties”, a new statement from the Association Of Independent Music Publishers reads. “Spotify’s decision shows a remarkable lack of appreciation for music rightsholders and the value of music”. 

Because Spotify premium now includes access to audiobooks - and in the US Spotify also has a standalone audiobooks subscription offer - the streaming service has decided that the main Spotify subscription product should be considered a bundle. 

That’s important in the US where the rates Spotify pays on the songs side are set by the compulsory licence that covers mechanical rights. That licence includes a different lower rate for bundles, a rate already relied on by things like Amazon Prime and the Apple bundles that include music, video and other content. 

AIMP goes on, “We are disappointed to learn that Spotify believes it should pay songwriters a lower royalty rate for music streams by unilaterally bundling a service - audiobooks - for existing premium subscribers who were not given an opportunity to ‘opt out’ of the offering. Spotify provided no advanced notification to music creators, rightsholders, or music fans, and provided no clear explanation for its decision”.

As part of a wider reshuffle of Spotify’s subscription products, the price of the main premium subscription is set to increase by another dollar, while a new basic tier will be made available at the current price point with no audiobooks. That new basic tier, as a music only service, will continue to pay the higher royalty rates to publishers and songwriters.

With that in mind, AIMP adds, “At the least, we hope that Spotify will properly alert its subscribers of the change and inform subscribers that they may switch from their current premium subscription to the new basic tier. At the basic tier, songwriters will be paid the settled streaming mechanical rate”. 

The US National Music Publishers Association previously said it would “not stand” for Spotify’s “perversion” of the compulsory licence”, adding that it is “looking at all options”. Alluding to that, AIMP added, “We support and join with our sister organisations to speak out against the unfair reclassification of the new premium bundle tier”.

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