Senators Call for FTC Investigation of Spotify's Subscription Bundles

Spotify Faces FTC Investigation Request Over Subscription Practices

Concerns regarding Spotify’s business practices have prompted a request for federal investigation. Two U.S. senators have asked the Federal Trade Commission (FTC) to examine allegations against the company.

Allegations of Bundling and Reduced Royalty Payments

The core of the complaint centers on claims that Spotify combined its music streaming and audiobook services into a pricier subscription tier without explicit user permission. Simultaneously, accusations have surfaced regarding a decrease in royalty payments made to content creators.

Senators Marsha Blackburn and Ben Ray Luján formally addressed the FTC in a letter dated June 20th. They assert that Spotify transitioned standard premium subscribers to these more expensive, bundled plans without providing adequate notice.

Regulatory Context and Potential Financial Motivations

The senators’ letter points out that current U.S. regulations allow digital music services to offer reduced royalty rates when subscriptions are bundled with other valid services. This creates a potential incentive for companies like Spotify to restructure their offerings.

“The apparent aim of Spotify is to diminish the statutory royalties paid to songwriters and music publishers,” the letter emphasizes. “This action has negatively impacted both the creative community and consumers.”

Previous Legal Challenges

A prior lawsuit filed by the Mechanical Licensing Collective (MLC) against Spotify, alleging underpayment to songwriters and publishers, was dismissed earlier this year in January. This recent request to the FTC represents a renewed effort to address these concerns.

Recent Subscription Restructuring and Price Increases

In March 2024, Spotify modified its Premium subscription levels. The inclusion of 15 hours of audiobook access led to a price increase to $12 per month for individual plans and $20 for family plans.

It’s been reported that users are required to actively decline the new plan to avoid the higher cost.

Financial Impact on Publishers

According to Danielle Aguirre, executive vice president of the National Music Publishers’ Association, publishers have experienced an estimated $230 million loss in revenue during the first year following the subscription changes.

Spotify’s Response

A Spotify spokesperson, in a statement provided to Variety, indicated that users were informed of the price adjustment a month in advance. They also highlighted the availability of “easy cancellations” and a variety of subscription options.

Spotify maintains that users have choices regarding their subscription plans.