When Bloomberg reported that Spotify would be upping the cost of its premium subscription from $9.99 to $10.99, and including 15 hours of audiobooks per month in the U.S., the change sounded like a win for songwriters and publishers. Higher subscription prices typically equate to a bump in U.S. mechanical royalties — but not this time.
By adding audiobooks into Spotify’s premium tier, the streaming service now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams, given Spotify now has to pay licensing for both books and music from the same price tag — which will only be a dollar higher than when music was the only premium offering. Additionally, Spotify will reclassify its duo and family subscription plans as bundles as well.
Walk me through this.
Before Spotify, I’d buy a record (physical or digital) and listen to that. I pay the artist once. After Spotify, I buy a record and listen to it on Spotify. I pay the artist the normal record price and there’s a long tail from stream payouts (unless they don’t reach the payout threshold).
Before Spotify, if someone heard a song and didn’t buy the record, they didn’t pay the artist. After Spotify, if they still don’t buy a record, the artist now earns from stream payouts.
Finally, before Spotify, if someone bought a record but stopped buying after Spotify, the artist loses that record purchase. This is definitely bad. Was Spotify the real reason? Would something other than Spotify have pulled them away? What levels of fame are materially affected by this?
Do artists have to pay to be on Spotify? Is that the issue?