Spotify is revamping its subscription plans in the US, introducing a new “Basic” plan with no audiobook offering. The move comes after the streaming giant faced criticism for bundling music and audiobooks, negatively affecting compensation for songwriters in the US.
Previously, Spotify’s “Premium” The plan offered ad-free music listening, unlimited skips and 15 hours of audiobook access per month for a single price $11.99from which it was recently derived $10.99. Spotify added 15 hours of audiobook for Premium subscribers last October, giving paid subscribers access to a catalog of around 150,000 books.
Now, users can select the new one “Basic” plan in $10.99, which provides all the perks of streaming music, but without audiobooks, Spotify said on Friday (June 21). Existing Premium subscribers will retain access to audiobooks, but new subscribers will be able to choose between the basic plan and standard Premium, which remains at $11.99.
Spotify also continues to offer the $16.99/month “Premium Duo” and $19.99/month “Premium Family” plans that offer the same Premium benefits for two and up to six people living together, respectively.
For those who prioritize audiobooks, Spotify offers a special one “Access Audiobooks” plan for $9.99 per month. This tier provides 15 hours of audiobook listening, but music listening reverts to the ad-supported free tier. (In a lawsuit filed against Spotify, the Mechanical Licensing Collective (MLC) argues that that’s not how the Audiobooks access plan works, as it gives subscribers access to the ad-free version.)
Spotify’s launch of a basic audiobook-free plan appears to be a response to growing criticism of its bundling practices. In March, the company announced that it would reclassify its Premium subscriptions as “bundles” combining music and audiobooks. According to the legal agreement known as Recordings IVmusic streaming services in the US can pay lower royalties to publishers and songwriters for music offered as part of bundles compared to stand-alone music subscriptions.
Spotify’s move sparked outrage from trade bodies, music companies and even lawmakers, who argued it unfairly disadvantaged songwriters.
By releasing audiobooks and offering a cheaper Basic plan, Spotify aims to cater to a wider range of user preferences. Price-conscious listeners who don’t use audiobooks can now enjoy ad-free music at a slightly lower price, while audiobook lovers have the option to sign up for the exclusive Audiobooks Access program.
The latest move also comes amid increasing competition in the music streaming market. Amazon Music Unlimited offers a cheaper “Atom” plan in $9.99 and a single-device design at even lower $5.99.
Spotify, despite its slightly higher price, boasts a strong subscriber base. In the first quarter of 2024, the streaming service was added 3 million Premium subscribers, up 14% per annum, to 236 million.
While Spotify’s new plans offer more options for users, the issue of songwriter compensation remains. The Phonorecords IV agreement still allows lower royalties on bundled music. Last week, three US lawmakers expressed concern about Spotify’s bundling practice. In a letter addressed to Shira Perlmutterthe US Register of Copyrights, have questioned whether Spotify’s new practice is in line with the spirit of the Music Modernization Act (MMA) of 2018.
Separately, the National Association of Music Publishers (NMPA), representing major publishers such as Sony Music Publishing, Universal Music Publishing Group, Warner Chappell Music, and independent publishing companies, accused Spotify of “attacking songwriters”. President & CEO NMPA David the Israelite called Spotify’s actions “a cynical and potentially illegal move that ends a period of relative peace.”
The NMPA has already threatened Spotify with legal action over its new bundling policy and urged Congress to update US copyright law to allow publishers to trade in a “free market” like record labels do.
At the same time, US-based MLC sued Spotify, claiming that it does not pay any royalties to songwriters and publishers. They argue that Spotify’s application of the pricing formula for packages to Premium subscriptions does not comply with the law.
Meanwhile, Sony Music Publishing had said it was considering “all options” against Spotify over the change, saying in a letter that SMP songwriters and composers in the US saw their mechanical royalty payments from Spotify drop by about 20%.
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