Spotify Bundling To Cost Songwriters and Publishers $3.1 Billion By 2032

The National Music Publishers’ Association (NMPA) estimates that Spotify’s bundling scheme cost songwriters and publishers $230 million in its first year, with projected cumulative lost revenue of $3.1 billion by 2032.

The issue:

• The 2022 Phonorecords IV legal settlement set the on-demand streaming mechanical rates in the US between 2023 and 2027.

• It stipulates that mechanical royalties are calculated at a significantly lower rate for bundled subscriptions versus unbundled standalone music subscriptions.

• As per Music Business Worldwide (MBW), in March 2024 Spotify reclassified its Premium subscription tiers as bundles, offering 15 hours of audiobook access each month.

• Digital Music News states over 44 million subscribers were automatically converted into bundled subscriptions, resulting in a significant decline in royalty payments.

• As an example, it cites Spotify’s individual plan, in which mechanical royalties dropped from $15.78 million in pre-bundling February to just $9.58 million in post-bundling March.

• The NMPA estimates that the cumulative losses for publishers and songwriters could exceed $3.1 billion by the end of the next Copyright Royalty Board’s rate-setting period in 2032 (Phonorecords V).

Following suit:

• At the NMPA annual meeting in Alice Tulley Hall at New York’s Lincoln Center this week, NMPA General Counsel Danielle Aguirre reported that Amazon had followed Spotify’s lead, automatically converting music subscribers into a bundled plan.

• As per MBW, Aguirre reports that “in just the last three months, we’ve seen a 40% decrease in music revenue from Amazon,” with PROs hit “particularly hard.”

What they said:

• Aguirre: “This is an important moment for the future of mechanical rights and fair compensation, and we are preparing for the battle ahead, and we need your support to ensure that the Phono V outcome reflects the fair value of your songs.”