Songwriters Association files FTC complaint against Spotify over royalties

The National Music Publishers Associationa trade group representing music publishers and songwriters, filed a complaint with the U.S. Federal Trade Commission on Wednesday over Spotify Technology SA’s decision to provide audiobooks to subscribers, which resulted in reduced royalty payments to songwriters.

The addition of audiobooks gave Spotify leeway to reclassify its premium subscription offering as a “bundle.” Under a complicated system established by the US Copyright Royalty Board, this qualifies Spotify to pay a discounted fee to songwriters, as it now pays for licensing books and music at the same subscription price.

The NMPA alleges in its complaint that the package is illegal, as subscribers were automatically enrolled with no option to remain on the music-only tier, which does not yet exist in the US. Payments to songwriters could drop by about $150 million over the course of the year. as a result next year, according to the NMPA.

“This bait-and-switch subscription scheme is ‘overloading’ buyers with recurring payments for products and services they did not intend to purchase or did not want to continue purchasing,” the NMPA said in a letter to FTC Chair Lina Khan. “If it continues, Spotify’s conduct will cost consumers millions of dollars, undermine the music royalty system and harm competition.”

The NMPA also sent its complaint to 10 state attorneys general, including those in New York, Tennessee, California and Illinois, as well as several consumer advocacy groups, in an attempt to encourage state investigations and possibly class action lawsuits.

A spokesperson said Spotify’s approach to offerings and pricing is industry standard. “We notify users one month in advance of any price increases and offer easy cancellations as well as multiple plans for users to consider,” the spokesperson said. “In short, we categorically reject the NMPA’s baseless accusations.”

Spotify’s grouping change has put it at war with music publishers. Mechanical Licensing Collective, a royalty collection service, sued the streaming service over the issue last month. The group is asking a Manhattan federal court to order Spotify to stop classifying premium subscriptions as an added service and pay for lost revenue.

In response to the lawsuit, Spotify said it expects a “quick resolution” on terms that publishers and streaming services “agreed to and entered into years ago.”

Separately, the NMPA also sent a cease and desist letter last month regarding products it claims are infringing on songwriters’ copyrights. The NMPA alleges that music videos, lyrics and podcasts on the platform use copyrighted music without proper permissions.

“Before Spotify’s betrayal, we might have been able to work together to resolve this issue, but they have chosen the difficult path by going after songwriters once again,” NMPA CEO David Israelite said in a statement. at the time.

A Spotify spokesperson called the May letter a “press stunt full of false and misleading claims.”