Music publishers slap Spotify with an FTC complaint over its new bundle strategy
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Get ready to bundle… One of the largest music-industry groups is going after Spotify for adding audiobooks to its premium subscription tier. Spotify said the addition of audiobooks means it qualifies to pay a discounted “bundle” royalty rate music for streams. The National Music Publishers Association (NMPA) filed its first-ever FTC complaint on Wednesday, accusing Spotify of “cheating the music royalty system.” FYI: the NMPA is the largest US music publishing trade group, repping thousands of songwriters, publishers, and record labels like Universal Music Group and Sony Music.
NMPA said: Spotify has “declared war” on songwriters with its “unfair, deceptive, and fraudulent” move. It argues that the bundle is illegal since premium users were automatically opted in to audiobooks.
Not the only one: Last month, the Mechanical Licensing Collective, a royalty-collection service, sued Spotify, demanding that it stop classifying its premium subs as bundles and that it pay back any lost revenue.
Royalty pains… The bundle beef started in April after Spotify announced it would hike premium prices to help cover the cost of adding audiobooks. The NMPA’s legal options may be limited: US copyright law says that streamers are allowed to pay lower royalty rates if they also pay to license music and books. Rival Apple Music doesn’t offer audiobooks within its music-streaming subscription.
Don’t bite the hands that streams you… Spotify says it expects to pay the music biz more than ever this year. But it’s estimated that the bundle loophole could cost songwriters and publishers ~$150M in lost revenue over the next year. Now, NMPA is preparing for an “all-encompassing” response (adding that it's never lost a copyright-infringement suit). In addition to its FTC complaint, the NMPA also requested an investigation from 10 state attorneys general. Down the line, that could affect rivals like Amazon, which offers both Amazon Music and audiobooks through its Prime subscription.