Spotify Unveils Basic, Music-Only Subscription Tier at Reduced Price
Written by Chris Eggertsen on June 22, 2024
Spotify has officially unveiled a basic premium tier for users who prefer not to pay extra for audiobooks, the company announced Friday (June 21). The plan is priced at $10.99 — $1 less than its premium individual plan, which includes 15 hours of audiobook listening time per month.
The reveal of the basic tier, which Spotify teased during its Q1 earnings call in April, follows the company’s June 3 announcement that it would be raising prices in the United States for a second consecutive year. Starting in July, its premium individual plan will bump up to the $11.99 price point, while its duo plan will rise to $16.99 a month (up from $15.99) and its family plan will spike $3 to $19.99 a month.
The news also follows a recent Bloomberg report that Spotify plans to roll out a high-fidelity audio tier later this year for $5 more per month than its premium individual plan.
Shares of Spotify rose 1.5% to $317.86 this week, marking their third consecutive weekly gain. On Friday alone, the stock gained more than 1.2%.
The new tier comes amid a pitched battle between Spotify and music publishers following the streamer’s decision to reclassify its premium offerings as “bundles,” which qualifies those plans for a discounted rate on mechanical royalties in the United States. According to Billboard estimates, publishers and songwriters will earn roughly $150 million less in royalties in the first year following the change.
On May 15, nearly one month after the bundles were first reported, the National Music Publishers’ Association (NMPA) sent Spotify a cease and desist letter for allegedly hosting unlicensed lyrics, music videos and podcast content on the service. The following day, the Mechanical Licensing Collective (the MLC) sued the streaming company, alleging it had “improperly” classified its premium tiers as bundles.
Later in May, NMPA president/CEO David Israelite sent a letter to Judiciary Committee leadership in both the U.S. House and Senate asking for an overhaul of the statutory license in section 115 of the Copyright Act, which “prevents private negotiations in a free market” for mechanical royalty rates for songwriters and music publishers in the United States. At the NMPA’s annual meeting on June 12, Israelite announced that the organization had filed an official complaint with the Federal Trade Commission (FTC) and sent letters to the attorneys general for nine states along with consumer trade groups, alleging Spotify has violated the Restore Online Shoppers’ Confidence Act (“ROSCA”), section 5 of the FTC Act and other consumer protection laws.
Spotify has hit back at the various actions taken by the NMPA, at various points calling its accusations “baseless” and “misleading.” Of the MLC lawsuit, the streamer argued that “bundles were a critical component” of the Phono IV agreement struck between publishers and streaming services, that “multiple DSPs include bundles as part of their mix of subscription offerings” and that it “paid a record amount to publishers and [collecting] societies in 2023 and is on track to pay out an even larger amount in 2024.”
