Spotify expected to pay out $150M less to musicians after new price increase

In April 2024, the news broke that Spotify was going to be increasing its subscription prices. For individual users, the change will only mean an additional dollar per month—not a huge leap, nor uncommon for any such streaming service, though still annoying. According to Bloomberg, the company is planning to justify this price increase by adding the option to stream audiobooks, in addition to music and podcasts. The increased costs, Spotify says, will help to cover the royalty costs that the company will have to pay in order to offer this audiobook option.

That may very well make sense from a user standpoint — and indeed, for the company's bottomline. But as Billboard reports, the decision to increase the kind of content available on the app means that Spotify will also be able to pay less money overall to the people who create that content:

By adding audiobooks into Spotify's premium tier, the streaming service now claims it qualifies to pay a discounted "bundle" rate to songwriters for premium streams, given Spotify now has to pay licensing for both books and music from the same price tag — which will only be a dollar higher than when music was the only premium offering. Additionally, Spotify will reclassify its duo and family subscription plans as bundles as well.

To determine how great this loss in royalty value would be for the music business, Billboard calculated that songwriters and publishers will earn an estimated $150 million less in U.S. mechanical royalties from premium, duo and family plans for the first 12 months that this is in effect, compared to what they would have earned if these three subscriptions were never bundled. Notably, this change will not impact Spotify's premium, duo or family pay outs for the first two months of 2024. Bundling kicks in starting in March, so this number refers to losses for the first 12 months after premium, family and duo is qualified as a bundle, not the calendar year of 2024.

This, of course, also comes after the company laid off 1500 workers, which happened just one month after the company also announced plans to demonetize 2/3 of the songs on the platform for not getting enough streams.

The enshittification continues.

Spotify to Pay Songwriters About $150 Million Less Next Year With Premium, Duo, Family Plan Changes [Kristin Robinson / Billboard]