The campaign against Spotify’s sneaky audiobook bundling plans in the US is gaining momentum, with the boss of the National Music Publishers Association declaring “it’s time to fight again”, and the Association Of Independent Music Publishers committing its “unequivocal support” for the NMPA as it embarks on a “critical battle to prevent Spotify’s scheme from taking effect”.
In a new statement, the indie publishers have also changed their demand to Spotify. Previously they said that the streaming service should tell users how to change their account settings so that they would not be unknowingly subscribed to a controversial new bundle package that includes audiobooks and pays lower royalties to songwriters. Now they want Spotify to automatically make that change, so that users would have to actively opt in if they decided they want the bundle option.
Spotify has been reshuffling its range of subscription products in the US, so that there is one subscription option that offers music and podcasts, and another that offers audiobooks. Meanwhile, the existing premium subscription option - which includes music, podcasts and audiobooks - is being defined as a bundle of those two other products.
That is important because of the compulsory licence that sets out the payments streaming services must pay to music publishers and songwriters in the US. That licence has provisions for bundles, meaning that if Spotify reclassifies its main premium subscription as a bundle it will reduce what it has to pay publishers and songwriters on its core product. It’s been estimated that this move could result in $150 million of lost revenue.
The compulsory licence - which is reviewed by the Copyright Royalty Board every five years - has frequently caused controversy. For the 2018-2022 period, many streaming services, including Spotify, tried to get the top line royalty rate set by the CRB reduced by taking the matter to court. They failed, although they did get some concessions around bundling in the process - the provisions that are now in the spotlight.
With the compulsory licence for 2023-2027, ultimately a deal was done between the NMPA and DiMA, the trade body for the streaming services, which in theory brought to an end years of feuding between Spotify and the publishers. Until the recent revelation of how Spotify planned to use the bundling terms to its advantage, that is.
The NMPA is considering its legal options for fighting Spotify's move, with CEO David Israelite writing on X on Friday, “Spotify has launched a major assault on songwriters. Again. Remember last time when we won an overdue rate increase and Spotify did everything in its power to try to deny songwriters that victory? We fought and we won. It’s time to fight again”.
The Association Of Independent Music Publishers originally hit out at Spotify's plan last month, but has now issued a new statement, prompted by that estimate that the move could result in $150 million in royalties being lost, what AIMP dubs as a “staggering” amount.
Accusing Spotify of instigating “a deeply cynical move”, the indie publishers note that, because of the compulsory licence, they “are legally prevented from negotiating protections against bad-faith tactics such as this”. Such restrictions do not apply to publishers and collecting societies in most other countries, and do not apply to record labels and music distributors in the US.
The compulsory licence is administered by collecting society the MLC. It remains to be seen what position, if any, it takes on Spotify's bundling tricks. The society has gone legal in a separate dispute over how Pandora has chosen to interpret the compulsory licence. In that legal battle, Pandora not only disagrees with the MLC’s opinion regarding how the licence is interpreted, but has also argued that the MLC shouldn’t even have an opinion.
Either way, among publishers and songwriters, the campaign against Spotify’s bundling trick is only going to build. AIMP urges “all independent music publishers to join us in this stance and make their songwriters aware of this attack on their livelihood”.
And, it adds, in taking this stance the music community is supported by a group of book authors concerned about Spotify's manoeuvres in the audiobook domain, with AIMP saying it is aligned with the Coalition Of Concerned Creators, an organisation set up by authors and literary agents last year.
As part of its subscription reshuffle, Spotify will also put up the price of its main premium product - the one with music, podcasts and audiobooks - by a dollar. Previously AIMP said that the streaming service should alert all of its subscribers that they can avoid that price increase by opting for the music and podcast only subscription, which in turn pays higher royalties to songwriters.
In its new statement, AIMP makes a different demand. “The right thing to do is to default existing subscribers to music-only accounts, and then give them the option to add-on the audiobook service for an additional $9.99 per month - Spotify’s proposed standalone rate for audiobooks. This ensures a proper, non-devalued royalty rate for both music and audiobook publishers and rightsholders, who will otherwise both be negatively affected by bundling”.