Music Publishers File FTC Complaint Against Spotify for ‘Cheating the Music Royalty System’

Photo Credit: Felipe Pelaquim

The National Music Publishers’ Association (NMPA) has filed a complaint with the FTC over Spotify’s audiobook bundling scheme. The complaint says Spotify is increasing profits “by deceiving customers and cheating the music royalty system.”Spotify began offering audiobooks as part of its streaming option in November 2023, giving 15 hours of audiobook content to Spotify Premium subscribers. Then in March 2024, Spotify added a new subscription option for an audiobook-only plan that offers another 15 hours for a flat $10 fee. At the time, Spotify pointed to a 45% increase in free tier Spotify users interacting with audiobook content.

The NMPA complaint says Spotify is forcing its Spotify Premium customers to pay more for content that they don’t use and can’t opt-out of receiving. Estimates suggest Spotify will pay around $150 million less to music publishers in the first year of Spotify’s bundled Premium plan.

The complaint goes into the details of the process of going from Spotify Premium to a free-tier access user, saying Spotify employs dark patterns to keep users subscribed to the bundled Premium plan. “Starting at a user’s ‘Account’ page and clicking ‘Manage Your Plan,’ a user would need to click through five separate pages before the switch could be confirmed.”

“Along the way, users are confronted with repeated and threatening reminders of the functionalities and control over their music that they will lose if they switch from Premium—a textbook example of a dark pattern.”

Aside from complaining about Spotify’s customer retention flow, the NMPA says “Spotify has advanced a ploy to pay less in royalties for the music content that its subscribers actually want and originally joined Spotify to access.”

The NMPA also claims that Spotify’s standalone audiobook bundle for $10 a month is a sham. “It is not designed to entice consumers, rather it exists solely to allow Spotify to claim that audiobook content is a significantly and independently valuable aspect of its ‘bundled’ Premium Plan. The sham nature of the Audiobook 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.”“As proof of the connection between the plan’s offering and the unique system for determining royalties in the United States, the Audiobooks Access Plan exists only inside the United States and is not currently offered in foreign countries, because outside the U.S., Spotify does not have the same ability to use a ‘bundled’ offering to lower royalties.”

“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.”

“These actions collectively harm consumers by depriving them of choice, raising their costs, and ultimately leading to lower quality and less availability of music—which is the opposite of what consumers expect in paying for Spotify Premium. They are also an outlier within the industry. Other companies have distinct and clearly advertised music-only and bundled-content services, for which consumers may knowingly sign up.”

The NMPA highlights several consumer complaints about the newly bundled plans, showcasing how unhappy many of them are. “They need to make options to leave audio books out of the plan if we choose,” writes one consumer. “I have audible. I don’t need it on Spotify. They have the same books.”The NMPA asks the FTC to review Spotify’s bundling practices to “protect consumers and the integrity of the music marketplace.” It suggests without FTC intervention, consumers will pay more for content they don’t want while Spotify maintains its “unfair competitive advantage” due to accounting for nearly one-third of the music streaming market.

See the entire NMPA complaint to the FTC here.