This April, Spotify made waves with its controversial decision to reclassify its Premium tiers as ‘bundles’. They did so by combining music and audiobooks. This move allowed Spotify to pay a lower mechanical royalty rate to publishers and songwriters in the US. However, the backlash from songwriters and publishers has been fierce and unrelenting.
NMPA’s Fierce Response
At the National Music Publishers’ Association (NMPA) Annual Meeting in New York on June 12, NMPA boss David Israelite declared, “Spotify has declared war on songwriters. Our response shall be all-encompassing.” Indeed, the music publishing community has mobilized an aggressive campaign against Spotify. This includes a legal threat over unlicensed lyrics and a lawsuit from the Mechanical Licensing Collective (MLC) for underpaying royalties. It also calls for Congress to update copyright laws. This would allow publishers to negotiate in a free market like record labels.
FTC Complaint Filed
Adding to Spotify’s troubles, the NMPA has now filed an official complaint with the Federal Trade Commission (FTC). This accuses Spotify of “unlawful conduct” that harms millions of consumers and the music marketplace. The complaint alleges that Spotify deceived consumers by converting their music-only subscriptions into bundled audiobook-and-music subscriptions without consent, increasing prices, and complicating the process of canceling subscriptions. The NMPA claims that this practice negatively impacts music publishers and songwriters by reducing royalties and disadvantages market competitors.
Broadening the Battle
Israelite also revealed that the NMPA has referred the matter to several state attorneys general, inviting them to investigate the alleged consumer protection violations in their states. Additionally, the NMPA has reached out to leading consumer advocacy organizations, expecting them to object to Spotify’s treatment of consumers.
Addressing the audience, Israelite emphasized the NMPA’s commitment to defending songwriters and music publishers, stating, “Spotify knows that what it is doing is risky and problematic… But it is not too late for them to do the right thing.”
In response, a Spotify spokesperson defended the company’s actions as industry standard, noting that users were notified of price increases and offered multiple plans, including easy cancellations. Despite these reassurances, the dispute over Spotify’s bundling strategy and its impact on the music industry remains contentious.
Conclusion
Spotify’s attempt to expand its offerings by bundling audiobooks with its Premium plans has sparked a significant backlash from the music publishing community. Furthermore, as the battle intensifies, the outcome could have lasting implications for the music and audiobook streaming landscape. In conclusion, whether Spotify will reverse its course or continue to face mounting legal challenges remains to be seen. Be sure to check out the original complain, here.
[H/T] – MUSIC BUSINESS WORLDWIDE