Music publishers accuse Spotify of ‘bait-and-switch subscription scheme’

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Spotify has once again drawn the ire of the music industry. The National Music Publishers’ Association has called on the Federal Trade Commission to examine the streaming service’s addition of audiobook content into all of its paid subscription plans. According to the group’s FTC complaint, Spotify’s recent actions are part of “a scheme to increase profits by deceiving consumers and cheating the music royalty system.”

This requires some backstory. In November 2023, Spotify announced that it would include 15 hours of audiobook content as part of all its Premium subscription plans. A few months later, the company unveiled a new audiobook-only subscription, offering the same number of listening hours for $10 a month. The publishers’ organization claims that Spotify’s recent price increases are based on offering that extra audiobook content, and that paying customers are automatically being charged for a service they didn’t choose and can’t opt out of without switching to the free, ad-supported listening experience.

And the additional revenue from the higher Premium subscription costs may not go to the music composers. According to the FTC complaint, Spotify will pay about $150 million less in music royalties over the first year of these new bundled Premium plans.

The NMPA letter goes so far as to call the new audiobook-only plan “a sham” that “exists solely to allow Spotify to claim that audiobook content is a significantly and independently valuable aspect of its ‘bundled’ Premium Plan, as the Audiobook Access Plan costs only $1 less than the Premium Plan with the exact same audiobook content and music.”

A Spotify spokesperson provided Engadget with the following statement:

“Spotify’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. In short, we categorically reject the NMPA’s baseless accusations and will continue to provide consumers incredible value and a best-in-class experience.”

At this early stage, it’s hard to say whether this issue will impact Spotify’s planned overhaul of its royalty model. Both artists and publishers have routinely criticized the streaming ecosystem at large and Spotify in particular for underpaying the creatives behind the music.

Update, June 13 2024, 3:15PM ET: This story has been updated to include Spotify’s statement on the NMPA’s claims.



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