LOS ANGELES (CelebrityAccess) – Spotify is reshaping its subscription offerings in the US with the launch of a new “Basic” plan priced at $10.99, stripping out audiobook access to address growing criticism over its bundling practices. This change, announced on Friday (June 21) follows backlash from songwriters and the music industry, who argue that Spotify’s previous bundling of music and audiobooks under its “Premium” plan unfairly impacted songwriter compensation.
The previous “Premium” plan, which was increased from $10.99 to $11.99 per month, offered users ad-free music streaming, unlimited skips, and 15 hours of audiobook listening from a selection of 150,000 books. Introduced last October, this inclusion of audiobooks was seen as a perk but has since sparked significant controversy.
With the new Basic plan, Spotify provides all the music streaming benefits without audiobook inclusion, effectively reverting to a simpler model for users who don’t need audiobook access. Current Premium subscribers will keep their audiobook benefits, but new users can now choose between the $10.99 Basic plan or the $11.99 standard Premium plan, which maintains the audiobook offering.
Additionally, Spotify continues to offer its “Premium Duo” plan for $16.99 per month and the “Premium Family” plan for $19.99 per month, catering to two and up to six users, respectively. Both plans include the full Premium benefits.
Spotify now offers a standalone “Audiobooks Access” plan for audiobook enthusiasts for $9.99 monthly. This plan provides 15 hours of audiobook listening while reverting music to the ad-supported free tier. However, the Mechanical Licensing Collective (MLC) has filed a lawsuit against Spotify, arguing that this plan still provides ad-free music, thus violating the terms of their agreement.
Spotify’s Spotify’sto unbundle audiobooks come in response to intense criticism over its subscription model changes. In March, Spotify’s action of its Premium subscriptions as ‘bundles’ allowed lower royalty payments to songwriters under the Phonorecords IV agreement. This agreement enables music streaming services to pay reduced royalties for music offered in bundled packages compared to standalone music subscriptions.
The move prompted an outcry from various stakeholders in the music industry. Trade bodies, music companies, and lawmakers argued that this bundling practice disproportionately disadvantaged songwriters. The National Music Publishers Association (NMPA) accused Spotify of “attacking songwriters” and described the company as “a cynical and potentially unlawful move. NMPA President and CEO David Israelite highlighted that this change has significantly reduced mechanical royalty payments to US songwriters.
Three US lawmakers have also voiced concerns over Spotify’s practices in a letter to Shira Perlmutter, the US Register of Copyrights, questioning their compliance with the Music Modernization Act (MMA) of 2018.
Spotify’s restructuring of its plans aims to cater to a broader user preference, especially those who do not use audiobooks and prefer a slightly lower-priced subscription. This move also places Spotify in a competitive position against other streaming services like Amazon Music Unlimited, which offers a $9.99 “Individual” plan and a $5.99 single-device plan.
Despite the controversies and higher subscription fees, Spotify continues to grow. In the first quarter of 2024, the streaming giant reported a 14% year-over-year increase in Premium subscribers, reaching 236 million.
Introducing the Basic plan might appease some users, but the issue of songwriter compensation remains contentious. The MLC has taken legal action against Spotify, alleging underpayment of royalties due to the bundling strategy. Sony Music Publishing (SMP) is also evaluating its options against Spotify, which claims significantly reduced mechanical royalty payments for its songwriters.
Spotify’s new subscription model represents a strategic shift amid rising competition and ongoing fair compensation for songwriters. How these challenges are addressed will significantly impact the company and the broader music industry as the streaming landscape evolves.
