Music publishers have leveled serious accusations against Spotify, alleging that the streaming giant has engaged in a deceptive subscription scheme.
This controversy stemmed from Spotify's decision to integrate audiobook content into its paid subscription plans, which has drawn scrutiny and criticism from the industry.
Music publishers have leveled serious accusations against Spotify, alleging that the streaming giant has engaged in a deceptive subscription scheme.TOBIAS SCHWARZ/AFP via Getty Images
Spotify Receives Backlash for Deceptive Subscription Scheme
In a bold move that has sparked controversy within the music industry, Spotify has integrated audiobook content into its paid subscription plans, prompting allegations from the National Music Publishers' Association of deceptive practices aimed at boosting profits while undermining music royalties.
The association has lodged a formal complaint with the Federal Trade Commission (FTC), accusing Spotify of leveraging audiobooks to inflate subscription costs without adequate consumer transparency or fair compensation for music creators.
This development reignites longstanding tensions over equitable compensation in the streaming era, casting a spotlight on Spotify's evolving business strategies and their implications for both consumers and music industry stakeholders.
Spotify announced in November that it would integrate 15 hours of audiobook content into all Premium subscription plans. The company initially assured users that no action was necessary on their part.
Audiobooks designated as "Included in Premium" would be instantly playable. Premium subscribers were allotted 15 hours or about two audiobook equivalents per month. If users exceed this limit, they could purchase a 10-hour top-up for $12.99. Spotify also offers another option: the Audiobooks Access Tier.
Available initially in the US, the Audiobooks Access Tier offers 15 hours of audiobook listening per month for $9.99. Subscribers can gain access to Spotify's extensive library of over 200,000 titles while retaining the option to listen to ad-supported music on the free tier.
The publishers' organization argued that Spotify's recent price hikes are tied to the added audiobook content, and users are being billed automatically for a service they did not select and cannot opt out of without switching to the free, ad-supported listening option.
Spotify's increased Premium subscription fees may not benefit music composers. The FTC complaint alleged that Spotify could pay approximately $150 million less in music royalties during the first year of these updated bundled Premium plans.
The NMPA letter sharply criticized Spotify's new audiobook-only plan, denouncing it as deceptive. According to the letter, the plan is designed to artificially enhance the perceived value of Spotify's bundled Premium Plan by offering the same audiobook content and music for just $1 less than the Premium Plan.
It remains uncertain if this development will affect Spotify's intended changes to its royalty model. Artists and publishers frequently criticize the streaming industry, including Spotify, for paying insufficient royalties to music creators.
As Spotify faces scrutiny from regulators and industry stakeholders, the impact on its proposed royalty model changes and broader implications for digital content distribution remain uncertain.
