Spotify is a famous music platform that recently started offering audiobook content to its subscription listeners. However, there is a catch. Spotify has added 15 hours of free audiobooks to its premium plans. They have launched a monthly $10 audiobook subscription, offering the same 15 hours of listening. The National Music Publishers Association (NMPA) believes that Spotify is cheating publishers and customers through this scheme.
Spotify is significantly decreasing the royalty that it needs to pay to publishers and singers. The NMPA complains that paid subscribers are automatically charged for a service they do not want. They cannot unsubscribe from this service without opting for a free version with ads. Spotify is looting its users and violating the rights of publishers behind this scheme. Per the FTC complaints ( Federal Trade Commission ), the composers do not benefit from this premium service.
The company started this new bundle offer in March and secretly launched an audiobook-only plan. This was then reclassified as a duo and family bundle plan as it included audiobooks. However, as per the agreement with the U.S. mechanical royalty rate for 2023-2027, the products were very different. Due to this, the royalty rates per content are lower now as consumers get multiple offerings from the same subscription model and price.
Composers and publishers are suing Spotify for approximately $150 million for fewer royalties in copyright. This will be implemented in the first year of starting this scheme. U.S. law lets streaming services like Spotify get a blanket license for music at a set royalty rate. The MLC, appointed by the U.S. Copyright Office, collects royalties for songwriters and publishers. They sued Spotify, claiming it misclassified its service after adding audiobooks to lower its royalty payments.
Now, it is still unclear whether Spotify will revamp its premium model for audiobooks. However, they claim that the new audiobook plan is a “farce.” They are now saying that it only exists so Spotify can argue that audiobooks are a valuable part of their Premium Plan. They noted that the Audiobook Access Plan costs just $1 less but offers the same content.
The MLC sued Spotify for unpaid royalties and late fees, seeking monetary damages. The complaining party pleaded in court to seek correct usage reporting and unpaid royalties for a period dating back to March 2024. Additionally, Spotify must provide an order of compliance if they want to work further with them. The case is in the U.S. District Court for the Southern District of New York.
Navkiran Dhaliwal is a seasoned content writer with 10+ years of experience. When she's not writing, she can be found cooking up a storm or spending time with her dog, Rain.