Including audiobooks in the premium tier is nothing more than a Spotify scam, say music publishers, intended to cheat consumers and music labels alike.
They say the sole purpose of adding audiobooks into the subscription was to find an excuse for charging consumers more while paying music labels less …
Here’s what Spotify did
The complaint may solve a mystery we raised last year. Let’s start with a quick recap …
- Spotify Premium charges for music without ads, and pays a royalty to music labels
- The company last year starter including some audiobook listening
- It later offered an audiobook-only tier for just $1 less
- It subsequently increased the cost of Spotify Premium
We covered the audiobook news at the time, in a piece entitled Spotify audiobooks now available in standalone $9.99 tier – but nobody knows why.
But music labels say they now know the reason …
Music labels say this is a scam
The National Music Publishers’ Association (“NMPA”) has made a formal complaint to the Federal Trade Commission (FTC).
First, it says, consumers were scammed.
Spotify has deceived consumers by converting millions of its subscribers without their consent from music-only subscriptions into “bundled” audiobook-and-music subscriptions, publicly announcing increased prices for those subscriptions, failing to offer an option for subscribers to revert to a music-only subscription
Second, it says Spotify is also cheating music labels, and thus artists and composers.
Spotify now pays significantly less in royalties to music publishers and songwriters under the assertion that its Premium Plan subscribers are all paying for a bundled-content subscription and that audiobooks comprise a valuable aspect of that subscription. In fact, Spotify will pay approximately $150 million less in music royalties during the first year that the new “bundled” Premium Plans are in effect than what it previously paid in royalties for music-only Premium Plan subscriptions.
Top comment by jgibson2400
Kind of amazing how the music industry successfully framed the issue as Spotify being the bad actor and not the record companies. For every $100 in revenue, streaming media companies are only collecting $26. $74 goes the music industry. Record companies keep $43 of that and the artists end up with $9. How and why do we allow anyone other than the record companies to be framed as the bad guy in this equation?
Finally, it says that competitors like Apple Music are harmed, because they have to compete with a service paying lower royalties.
Audiobook-only tier is a sham
The NMPA says that this was the only reason Spotify launched the audiobook-only tier. We said at the time that it made no sense for anyone to subscribe to it, and the association provides further evidence.
The sham nature of the Audiobooks Access Plan is obvious from the fact that it is impossible to find on Spotify’s website and is not listed as part of Spotify’s subscriptions […]
Indeed, if a user clicks on the “Available plans” button on Spotify’s website, it navigates to a page that does not even list the Audiobook-only subscription.
The plan’s sham nature is also apparent from the fact that it is priced far above comparable products offered by competitors, such as AudiblePlus, which offers unlimited audiobook listening for just $7.95 per month.
Spotify told us it rejected the claims, but didn’t address them specifically:
Spotify’s approach to expanding its offering and raising prices is industry standard. We notify users a month in advance of any price increases and offer easy cancellations as well as multiple plans for users to consider. In short, we categorically reject the NMPA’s baseless accusations and will continue to provide consumers incredible value and a best-in-class experience.
Photo by @felipepelaquim on Unsplash
FTC: We use income earning auto affiliate links. More.
Comments