Spotify Bundling Fallout Continues As U.S. Senators Voice ‘Serious Concerns’ and Demand FTC Investigation

Spotify head Daniel Ek, whose company is facing calls for an FTC investigation over its aggressive bundling strategy. Photo Credit: Fortune Live Media / CC by 2.0

The fallout over Spotify’s bundling shenanigans isn’t through yet, as federal lawmakers from both sides of the aisle are now urging the FTC to launch a related investigation. Senators Marsha Blackburn (R-TN) and Ben Ray Luján (D-NM) entreated FTC Chairman Andrew Ferguson to scrutinize the bundling craze – as well as the consumer and creator impact thereof – in a letter that was shared with DMN.

We’ve covered this craze, which has spurred some litigation and considerable criticism, every step of the way. Long story short, Phonorecords IV runs through 2027 and treats bundled revenue a lot differently than unbundled revenue.

As a result, the addition of audiobook listening into Premium and the launch of Spotify’s $9.99 audiobook-only subscription option brought massive music-space royalty consequences. We’ve already broken down the involved numbers and calculations in detail.

But once again in the interest of brevity, Spotify has unilaterally reclassified nearly all its existing U.S. subs as bundles. (Technically, a difficult-to-spot music-only plan is available to existing customers sans audiobooks for slightly less per month – more here in a moment.)

And as emphasized by the National Music Publishers’ Association (NMPA) and others, major-publisher direct deals or not, that means substantially less money is reaching songwriters and publishers from Spotify in the States.

Enter the senators’ “serious concerns about Spotify’s recent move to convert all of its premium music subscribers into different—and ultimately higher-priced—bundled subscriptions without their knowledge or consent.” “These actions harm consumers and could deeply damage the marketplace and the music royalty system,” Senators Blackburn and Luján continued. “We urge the FTC to investigate the impact of Spotify’s recent actions, to take steps to protect Americans from being forced into subscriptions without notice or choice, and to safeguard the music marketplace.”

Running with the idea – that Spotify simultaneously shortchanged consumers and songwriters – the senators not-so-subtly said the streaming service had “exploited” the system.

“Seeing an opportunity,” the senators indicated, “Spotify has exploited this regulation by converting all Premium Plan music subscribers into a new, bundled subscription offering without consumers’ consent or any notice. Spotify’s intent seems clear—to slash the statutory royalties it pays to songwriters and music publishers. Not only has this harmed our creative community, but this action has also harmed consumers.”

Returning to the aforementioned music-only tier, the senators criticized the offering as overly difficult for consumers to find and utilize. “Additionally, Spotify has hidden the Basic Plan so that existing subscribers must jump through endless hoops to find the option,” they drove home.

With that, the lawmakers closed by reiterating the situation’s significance and their calls for an FTC investigation.“As the largest music streaming service in the United States,” the senators proceeded, “Spotify has achieved market dominance in the American music streaming economy and their actions will have lasting repercussions on the creative community and consumers across the country.”

Needless to say, it’ll be worth closely monitoring the possible probe from here. Furthermore, in an era where mega-bills loom large and music-sector legislation has already passed as part of gargantuan packages, that the issue is officially on lawmakers’ radar may prove consequential as well.