Is Spotify's free tier bait-and-switch? Music publishers file complaint
Spotify, the popular music streaming service, is facing allegations from the National Music Publishers's Association (NMPA) over its recent subscription plan changes. The NMPA has lodged a complaint with the Federal Trade Commission (FTC), accusing Spotify of implementing a strategy that the association describes as "bait-and-switch." The NMPA claims that Spotify's recent move to include audiobooks in all paid subscription plans is "a scheme to increase profits by deceiving consumers and cheating the music royalty system."
Audiobook inclusion sparks controversy
In November 2023, Spotify announced that it would integrate 15 hours of audiobook content into all Premium plans. This move was followed by the introduction of a new audiobook-only subscription, priced at $10/month for the same listening hours. The NMPA alleges that Spotify's recent price hikes for Premium subscriptions are linked to the additional audiobook content, and that subscribers are being billed for a service they didn't choose and cannot cancel without switching to the free, ad-supported option.
NMPA claims Spotify's actions will reduce music royalties
The NMPA also asserts that the extra revenue generated from the increased Premium subscription costs will not benefit music composers. The association predicts that Spotify's music royalty payments will decrease by approximately $150 million in the first year of these new bundled Premium plans. The NMPA's letter describes Spotify's audiobook-only plan as a scheme designed to inflate the perceived value of audiobook content within its 'bundled' Premium Plan.
Uncertainty looms over Spotify's royalty model overhaul
It remains uncertain whether the accusations will influence Spotify's proposed overhaul of its royalty model. The streaming service has been under constant scrutiny from artists and publishers for allegedly underpaying those responsible for creating music. The NMPA's complaint is the latest in a series of challenges faced by Spotify, as it strives to maintain its position and generate more profits in the competitive music streaming industry.
