Spotify's latest royalty statements reveal a dramatic shift towards bundled subscriptions, significantly impacting publisher payouts. According to confidential documents shared with Digital Music News, approximately 97% of Spotify subscription accounts in the United States are now categorized as bundles, resulting in lower mechanical royalty rates.

Key Findings from March 2024 Statements:

• Over 20 million Individual subscriber accounts transitioned to bundled plans
• Only 869,912 Individual accounts remain non-bundled
• 4.17 million Duo accounts now bundle-categorized (up from 3.86 million)
• 5.65 million Family accounts bundled (up from 5.27 million)
• Nearly 100% of Family and Duo plans have been converted to bundles

Financial Impact:

• Annual royalty decline now estimated to exceed $160 million
• Spotify projects to gain over $500 million annually from price increases
• Publishers expected to see minimal benefits from these increases

Industry Response:

• NMPA chief David Israelite describes it as a "war on songwriters"
• MLC has filed a lawsuit challenging bundling reclassifications
• NMPA filed complaints with FTC and state attorneys general
• Push for federal legislation to enable direct publisher negotiations

Future Developments:

• Spotify plans to introduce a music-only option in the US
• Subscribers may have option to downgrade to non-audiobook plan for $1 less
• Company prepared to defend bundling strategy in legal proceedings

Despite ongoing legal challenges and industry pushback, Spotify continues to implement its bundling strategy, maintaining that its approach aligns with industry standards and that users receive adequate notice of changes.

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