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News / Kitty Lester / 20 Jun 2024


2 minute read

Spotify’s bungling errors - or should that be bundling errors - in recent months have led to a fair amount of ill will from industry partners, employees and users alike. From mass lay-offs and a class-action suit from ‘Car Thing’ subscribers to Daniel Ek’s now infamous “the cost of creating content is close to zero” tweet, there’s been a marked sea change in sentiment towards the platform which was once heralded as single-handedly reviving a withering music industry.

Few moves have provoked as much widespread ire, however, as Bundle-gate. To understand what’s going on, let’s rewind to March, when Spotify released a statement to the MLC and other publishing partners saying that “changes in our product portfolio” would mean that they would start paying out to rights holders differently. 

By “changes”, they were referring to their re-classification of their premium tiers from a stand-alone music subscription to a bundle, due to the fact they are now including 15 hours of audiobooks as part of premium subscribers’ plans (an estimated 85% of total Spotify subscribers). This new classification means that Spotify will be able to pay a lower mechanical royalty rate to songwriters. 

How much lower, you may ask. Well according to Billboard, this semantic issue could mean between $150 million – $180 million less to songwriters and publishers in the first year alone. The resulting fallout is more than just sharp tweets and negative headlines. The MLC announced last month that it would be filing a lawsuit against Spotify on the grounds that their Premium subscription is a ‘token value’ bundle, and therefore doesn’t qualify as a bundle under the Phonorecords IV rules. 

Spotify may view the bundle loophole as a zero sum game, but the cost of their savings (estimated at a meagre 1% of their yearly revenue by Manatt Entertainment’s Jordan Bromley and Trent Smith) is far greater than numbers on a balance sheet. At a time when the relationship between publishers and DSPs is curdling, manipulating the market and deliberately denying songwriters – the lifeblood of the platform – much-needed revenue is a sure fire way to light the fuse to a ticking time bomb. 


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