U.S. Senators Call on FTC to Investigate spotify’s Subscription bundling and Royalty Reductions
Allegations of Unapproved Subscription Upgrades Spark Concern
Two U.S. senators have formally petitioned the Federal Trade Commission (FTC) to investigate Spotify following accusations that the streaming service bundled its music and audiobook offerings into a higher-priced subscription plan without obtaining explicit user consent. This change reportedly coincided with a decrease in royalty payments to artists and rights holders.
Examining the Claims Within Regulatory Frameworks
On June 20, Senators Marsha Blackburn and Ben Ray Luján addressed a letter urging the FTC to scrutinize Spotify’s practice of automatically upgrading standard premium subscribers to more expensive bundled plans without clear, upfront notification. They highlighted that current U.S. regulations permit digital platforms to pay reduced royalty rates when multiple legitimate services are combined under one subscription.
“Spotify seems steadfast to substantially reduce statutory royalties paid to songwriters and publishers,which not only harms our creative community but also adversely affects consumers,” the senators asserted in their letter.
The Financial Toll on Creators: A Closer Look
This controversy follows last year’s lawsuit filed by the Mechanical licensing Collective (MLC) accusing Spotify of underpaying songwriters and publishers-a case dismissed earlier this year. In March 2024, Spotify revamped its Premium subscription tiers by adding 15 hours of audiobooks monthly, raising individual plan prices from $10 to $12 and family plans from $15 to $20; users must actively opt out if they prefer not to receive this bundled service.
The National Music Publishers’ Association (NMPA), represented by Executive Vice President Danielle Aguirre, estimates that this restructuring led to nearly $230 million in lost revenue for publishers within its first year alone.
User Communication Practices and Corporate Response
A representative for spotify stated that customers were notified about upcoming price adjustments at least one month in advance through multiple communication channels. The company emphasized it offers simple cancellation options alongside various subscription plans designed for diverse user preferences.
Industry-Wide Ramifications Amid streaming Dominance
This dispute highlights ongoing friction between streaming platforms experimenting with new revenue streams via bundling strategies and rights holders demanding fair compensation as digital consumption evolves. Streaming now accounts for over 80% of all U.S. music revenue, underscoring how critical it is to balance innovative offerings with equitable payment structures for creators.
- Streaming market Expansion: Global audio streaming revenues exceeded $30 billion in 2024 alone, reflecting rapid growth worldwide.
- Evolving Consumer Preferences: Increasing demand for integrated content bundles-combining podcasts, audiobooks, and music-is reshaping subscription models across services like Apple Music, Amazon Music Unlimited, and youtube Music.
- Ongoing Royalty Rate Debates: Discussions persist regarding how bundling impacts statutory royalty frameworks established under U.S law as the Copyright Royalty Board rulings of 2018.
A Turning Point in Digital Media Consumption?
The investigation underway could establish meaningful precedents concerning clarity requirements toward consumers when altering service terms or pricing-especially where such changes indirectly affect artist earnings through licensing tied to bundled subscriptions.
This case exemplifies challenges regulators face as rapidly evolving digital media ecosystems strive together to protect consumer interests while ensuring fair treatment of creative industries amid fierce market competition and innovation pressures.
