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Last month, Spotify offered the perfect solution to anyone upset with its shift towards bundled subscriptions — a plan solely dedicated to music. There’s just one problem: Spotify’s ‘Basic’ plan is practically impossible to find.
In response to all the hullabaloo and outrage over its shift towards bundled subscriptions, Spotify created the perfect solution: a music-only, bundle-free plan. Late last month, Spotify quietly launched the cheaper option for anyone who preferred a non-bundled alternative.
Introducing Spotify’s ‘Basic’ subscription tier, which does not include bundled access to audiobooks. A Spotify Basic subscription costs $10.99 per month, a dollar less than its Premium tier, which includes 15 hours of audiobook access. The stripped-down subscription plan would save customers money while preserving the higher publishing royalties associated with non-bundled subscriptions.
Problem solved.
“On Spotify, users discover and enjoy music, podcasts, and audiobooks, with various plans that meet our listeners’ needs,” the company relayed on June 21st while noting that “we’re now offering even more options for eligible U.S. subscribers.”
Suddenly, Spotify has a different story to tell regulators, lawmakers, and federal judges reviewing the company’s bundling shifts.
Sure, music publishers are livid over the company’s shift towards lower-paying bundles. But now, subscribers can choose whatever plan they want, including non-bundled options. And if subscribers can pick plans and bundles based on their preferences, isn’t Spotify just giving people what they want?
John likes the convenience of an $11.99 audiobook-bundled plan. Sally doesn’t like the bundled offering because she doesn’t like audiobooks. John and Sally move in together and get a Duo plan with audiobooks included.
It’s the subscriber’s decision, not Spotify’s.
Just one problem: Spotify’s menu of available subscription options doesn’t even list the ‘Basic’ plan.
Basic is also buried to existing subscribers who want to downgrade — if they’re even eligible to downgrade.
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So how is the elusive ‘Basic’ plan obtained? At the onset, would-be subscribers cannot select the Basic plan to start. Instead, a bundled subscription (for example, an $11.99 Individual subscription with audiobooks) must be purchased first, then downgraded within the Spotify app. And that assumes that the user knows a cheaper music-only plan exists.
But this gets worse. Spotify’s blog post announcing the change noted that Basic is only for ‘eligible’ users. So who’s ‘eligible,’ exactly?
That would be existing Individual subscribers, not Family or Duo subscribers. Anyone who wants a music-only subscription as a couple or a family is out of luck. (After the publication of this article, Spotify told DMN that all existing Family and Duo Premium plans can be downgraded into Basic, music-only versions.)
In other words, Spotify is funneling all new users to the default Premium tier, which includes bundled audiobook access (for $11.99 a month). Once subscribed, that user, if ‘eligible,’ must actively seek to downgrade the Premium subscription to ‘Basic’ (at $10.99 a month).
But even after an active subscriber attempts to make changes, Basic is still hidden. Here’s what the Account page looks like for an active subscriber to an Individual, audiobook-bundled $11.99-a-month plan.
Only after clicking ‘Available plans’ is the subscriber taken to a new set of options. After scrolling down, Basic appears. And this assumes that the subscriber knows a ‘Basic’ option exists—and Spotify probably won’t alert them.
So what’s next in this game?
At this point, it appears that Spotify is planning to use its Basic plan to make the case that subscribers aren’t being forced into bundles. But whether that works with FTC regulators, CRB judges, and others reviewing the legality of Spotify’s bundling shift is speculative.
After all, Basic is buried, and publishers will make that clear — though perhaps technically, Basic also helps to diffuse legal arguments against Spotify’s bundling by opponents like the Mechanical Licensing Collective (MLC) and National Music Publishers’ Association (NMPA).
The bigger game is more obvious. For now, Spotify has effectively shifted more than 98% of its subscription plans to bundles, which translates into serious savings. According to DMN’s latest estimates, Spotify is likely to save more than $160 million worth of publishing royalties a year in the United States, while boosting revenues by half-a-billion dollars on its recent price hikes.
The more bundles, the lower the royalty bill for Spotify — and the greater likelihood of long-term profitability. In the end, the math on this one is pretty ‘Basic’.
Update: Spotify has now responded to this piece, specifically to clarify that Family and Duo Premium bundled plans are eligible for downgrade into a Basic tier. The company also noted that it emailed all subscribers with news of the cheaper Basic option — though this email was not received by DMN. Perhaps most importantly, Spotify also confirmed that the music-only downgrade is only available to current subscribers.
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