Music Business

New Spotify subscription tiers unintentionally confirm Music’s Value

After raising the price of Premium US subscriptions twice in the last year, Spotify has added new plans with and without audiobooks.

The popular individual Premium plan remains at $11.99 per month with 15 hours of audiobook listening, while a new Basic Individual plan removes free audiobooks at $10.99 per month, just $1 less.

Spotify Duo and Family plans include 15 hours of audiobooks, but only for the “plan manager.” All plans include podcasts, 99% of which are available on multiple free platforms.

91.67% of Spotify’s value is Music

By pricing music-only subscriptions at $10.99 with a $1 increase to add audiobooks, Spotify is tacitly admitting that 91..67% of the value of its typical $11.99 subscription is attributable to music.

But when it comes to what it wants to pay in royalties, Spotify values music very differently.

The streamer recently reclassified its Premium Individual, Duo, and Family subscription plans as “Bundled Subscription Offerings,” which, thanks to wording in its contracts, allows it to pay songwriters and music publishers less.

According to the National Music Publishers Association (NMPA), the reduction that songwriters will take because of Spotify’s reclassification will exceed $150 million annually. The Mechanical Licensing Collective (MLC) agrees and has filed a lawsuit against Spotify, seeking what it says are unpaid royalties due under its compulsory mechanical blanket license.

Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a Berklee College Of Music professor.

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