U.S. Senators Marsha Blackburn and Ben Ray Luján have urged the Federal Trade Commission (FTC) to investigate Spotify following the music streaming service’s recent restructuring of its Premium tiers. The reorganization will be implemented in March 2024. It unveiled an audiobooks-focused bundled subscription that comes with 15 hours of audiobooks, in addition to the basic music streaming service.
Those changes have forced Spotify to increase the price of its Standard individual Premium tier to $12 and the family plan to $20. And on June 20, Blackburn and Luján co-authored their own bipartisan letter to the FTC. They warned that Spotify had turned regular premium subscriptions into higher-cost bundles, failing to adequately disclose the changes to consumers. And they claim that this change not only creates confusion for users, but negatively impacts creators as well by decreasing royalty payments.
Bundling makes it easier for Spotify to negotiate a lower music royalty rate. This isn’t possible under current U.S. regulations when they bundle subscriptions with other products. According to Danielle Aguirre, the executive vice president of the National Music Publishers’ Association, those changes would have a substantial impact. In only the first year, those publishers had already suffered an incredible $230 million in lost revenue.
The Mechanical Licensing Collective (MLC), the rate-setting organization, sued Spotify last year over underpayment of songwriters and publishers. This lawsuit was dropped in January, marking the latest battle in a larger and still-growing war between the platform and creators.
Responding to lawmakers’ concerns, a Spotify spokesperson noted that users were informed about the price increase one month ahead of time. They touted the company’s dedication to transparency. The spokesperson emphasized that Spotify offers “easy cancellations as well as multiple plans for users to consider.”
Concerns over Spotify’s pricing model and its impact on artists have been echoed by various stakeholders in the music industry. As one organization pointed out, “Spotify’s agenda is obvious—to cut the only royalty rate it pays to songwriters and music publishers to the bone. Aside from the fact that this has caused significant and lasting damage to our creative community, this action has directly hurt consumers as well.”
As the investigation unfolds, Spotify maintains that its restructuring is designed to enhance user experience while providing flexible options for subscribers.
