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What Is Spotify's Ongoing Feud With The Music Industry? Exploring Timeline Of Conflict
The licensing collective is demanding that Spotify cease categorizing Premium as a bundled service and reimburse it for any lost profits in court.
Spotify and the music industry have been at war since March 2024. It began with the digital music service platform classifying its premium tiers of streaming as “bundles,” a package that is eligible for a reduced rate on the US mechanical royalties because it includes numerous products at a single price.
According to the Mechanical Licensing Collective's (MLC) complaint, Spotify changed its description of its $10.99-per-month music streaming service in March by adding the word "bundles."
Spotify started paying songwriters and music publishers lower royalties for streams on its premium tiers but the music industry isn't taking the move well. As per Billboard, they will earn an estimated $150 million less royalties for the first year of bundling.
According to the lawsuit, submitted on Thursday (May 16) to a federal court in Manhattan, nothing else "about the Premium service has actually changed." Read further for a detailed timeline regarding the feud.
2022: Phonorecords IV vs music industry settlement
The National Music Publishers’ Association (NMPA), Nashville Songwriters Association International (NSAI), and Digital Media Association (DiMA), which represents the streaming services, collectively announced a voluntary settlement on August 31, 2022, to determine the rates for Phonorecords IV, the US mechanical royalty rate for 2023–2027.
With the highest headline rate in history, it was a victory for the music industry but it also featured a concession to streaming services, letting them pay less for bundled services.
Following this, on December 30 of that year, only a few days before it went into effect, the Copyright Royalty Board approved the Phonorecords IV settlement as the official US mechanical royalty rate for 2023–2027.
2023: Spotify began rolling out Audiobooks
The following year, on March 10, 2023, Spotify started offering its premium subscribers in the UK, Australia, and eventually the US, 15 hours of free audiobook listening each month.
2024: Spotify vs music industry feud escalates
In March 2024, Spotify's audiobook-specific tier was made available for the first time and also accounted for paying a lower "bundle" cost for its premium, duet, and family plans.
"On March 1, 2024, without prior notice to the MLC, Spotify unilaterally and unlawfully decided to reduce the Service Provider Revenue reported to the MLC for Premium by almost 50 percent," claims a complaint filed by the MLC.
A few days later, on March 4, Spotify is reportedly going to increase the cost of its premium subscriptions in the US and a few other markets. On April 19, it was first reported that Spotify had reclassified its premium, duet, and family subscriptions as bundles. However, the amount of impact was reported at the time.
Spotify said during its Q1 earnings call that it will launch a music-only subscription tier, but it did not specify when. The Recording Academy, the Association of Independent Music Publishers, and other music publishing and composer associations released statements criticizing Spotify's decision to reduce payments to publishers and songwriters in US mechanicals.
On May 15, the NMPA purportedly sent Spotify a cease and desist letter for improperly displaying podcast content, music videos, and lyrics that included the copyrighted musical compositions of its members.
“Before Spotify’s ‘bundling’ betrayal, we may have been able to work together to fix this problem, but they have chosen the hard road by coming after songwriters once again,” said David Israelite, chief executive officer at the NMPA, in a statement
A day later, the streaming service was sued by the MLC, claiming that the company had "improperly" classed its premium tiers as bundles. The licensing collective is demanding that Spotify cease categorizing Premium as a bundled service and reimburse it for any lost profits in court.
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