A bipartisan group of U.S. senators has launched a scathing critique of Spotify’s business practices, accusing the streaming giant of employing deceptive “bundling” strategies that simultaneously confuse consumers and shortchange music creators. The lawmakers are pressing for a Federal Trade Commission investigation into how Spotify packages its music subscriptions with other services like audiobooks, marketing them at a single price point while allegedly reducing royalty payments to rights holders.
At the heart of the controversy lies Spotify’s $9.99 monthly subscription, which includes music streaming and approximately 15 hours of audiobook content. By classifying this offering as a bundled product rather than standalone music, Spotify can apply reduced mechanical royalty rates, a maneuver that has reportedly cost music publishers and songwriters dearly. The streaming service has publicly acknowledged that its royalty savings from this bundling strategy exceeded $100 million in certain months.
Spotify’s bundling tactics slash artist payments while disguising music and audiobooks as a single subscription.
According to the National Music Publishers’ Association, this practice resulted in roughly $230 million in lost revenues to publishers in just one year.
The legal landscape surrounding this issue remains in flux. While a federal judge dismissed a copyright lawsuit filed by the Mechanical Licensing Collective against Spotify in early 2025, ruling that the company’s audiobook-music subscription qualifies as a bundle under current law, the MLC has requested reconsideration. They argue that the audiobook component holds minimal actual value compared to the music access.
The 2022 U.S. Copyright Royalty Board settlement established streaming royalty rates that will gradually increase to 15.35% of revenue by 2027 for standalone music streaming. However, bundled services are permitted to pay considerably less, creating a financial incentive for companies like Spotify to pursue bundling strategies.
Critics point out that Spotify initially reported its Premium subscription as standalone for music before adding audiobooks, which appears contradictory to its current bundling defense. David Israelite, CEO of NMPA, has publicly condemned the company’s actions as cynical and harmful to songwriters across the industry.
As Senate pressure mounts and regulatory scrutiny intensifies, the outcome could have far-reaching implications for compensation models across the digital music industry and how streaming platforms structure their subscription offerings in the future.
