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The National Music Publishers Association (NMPA) is bristling against Spotify’s new audiobooks bundling feature which means it pays a lower mechanical royalty rate to songwriters.
A 2022 settlement between NMPA and DSPs included a carve-out for bundled content, which Spotify now has with its audiobook offerings. Spotify added select audiobooks available for Premium users and a new, stand-alone Audiobook Access Tier. Bundled plans lower the mechanical licensing rates paid to songwriters as of March 1—when Spotify’s new audiobooks tier became available.
NMPA President & CEO David Israelite issued a strong statement about the move. “It appears Spotify has returned to attacking the very songwriters who make its business possible. Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace.”
“[The NMPA] will not stand for their perversion of the settlement we agreed upon in 2022 and are looking at all options,” Israelite continued. The 2022 settlement introduced a new mechanical royalty rate of 15.35% for the 2023-2027 period.
Spotify appears to be shaking up its product offering with a planned Premium price increase. But it also appears set to introduce a ‘Basic’ streaming plan that will not include audiobook access—and will pay the full agreed upon licensing rate instead of the bundling rate.
A Spotify spokesperson issued this response: “As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a standalone music subscription, and our approach is consistent.”
Spotify also notes that it has paid out $4 billion globally to publishing rights holders over the last two years. The DSP has delivered $9 billion in 2023 to recipients across record companies and music publishers, collection societies, performance rights organizations, and indie distributors.
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