Spotify launches new basic plan in the US, audiobooks excluded

June 25

	Spotify is introducing a new “Basic” subscription plan in the US, which excludes audiobooks. This change follows criticism over the bundling of music and audiobooks, which negatively affected songwriter compensation in the US. Previously, Spotify’s “Premium” plan included ad-free music, unlimited skips, and 15 hours of audiobook access per month for $11.99, recently increased from $10.99. Since last October, Premium subscribers have enjoyed access to a catalog of 150,000 audiobooks as part of their plan. The new “Basic” plan, priced at $10.99, offers all music streaming benefits without audiobooks. Existing Premium subscribers will retain their audiobook access, while new subscribers can choose between the Basic plan and the standard Premium plan, which remains at $11.99. Spotify continues to offer its “Premium Duo” plan at $16.99 per month for two users and the “Premium Family” plan at $19.99 per month for up to six people, both providing the same benefits as the Premium plan. For audiobook enthusiasts, Spotify offers a separate “Audiobooks Access” plan for $9.99 per month, providing 15 hours of audiobook listening. Music listening under this plan reverts to the ad-supported tier, although a lawsuit by the Mechanical Licensing Collective (MLC) challenges this setup. Spotify’s introduction of the Basic plan seems to address the backlash over its bundling strategy. In March, Spotify classified its Premium subscriptions as ‘bundles,’ combining music and audiobooks. Under the Phonorecords IV agreement, music streaming services in the US can pay lower royalties to publishers and songwriters for bundled music compared to standalone music subscriptions. This bundling sparked outrage from trade bodies, music companies, and lawmakers, who argued it disadvantaged songwriters unfairly. By unbundling audiobooks and offering a cheaper Basic plan, Spotify aims to accommodate various user preferences. Price-sensitive listeners who don’t use audiobooks can now enjoy ad-free music at a lower price, while audiobook fans have the Audiobooks Access plan as an option. The changes come amid intense competition in the music streaming market. Amazon Music Unlimited, for instance, offers a cheaper “Individual” plan at $9.99 and a single-device plan at $5.99. Despite its higher pricing, Spotify maintains a robust subscriber base. In the first quarter of 2024, Spotify added 3 million Premium subscribers, up 14% year-on-year, reaching a total of 236 million. However, the issue of songwriter compensation persists. The Phonorecords IV agreement still permits lower royalties on bundled music. Last week, three US lawmakers raised concerns over Spotify’s bundling practice in a letter to Shira Perlmutter, the US Register of Copyrights, questioning its alignment with the Music Modernization Act (MMA) of 2018. The National Music Publishers Association (NMPA), representing major and independent publishers, has accused Spotify of undermining songwriters. NMPA President & CEO David Israelite described Spotify’s actions as “a cynical, and potentially unlawful move that ends our period of relative peace.” The NMPA has threatened legal action against Spotify’s new bundling policy and urged Congress to update US copyright law to allow publishers to negotiate similarly to record labels. Additionally, the US-based MLC has sued Spotify, alleging underpayment of royalties to songwriters and publishers, claiming non-compliance with the rate formula for bundles. Sony Music Publishing has also expressed concerns, considering “all options” against Spotify. In a letter, Sony stated that their songwriters and composers in the US have seen mechanical royalty payments from Spotify reduced by approximately 20%. Source: www.musicbusinessworldwide.com