Nashville Songwriters Association pushes back at Spotify's bundling methods, say they'll affect royalties

In an attempt to recoup some $150 million in mechanical royalties for songwriters, the Nashville Songwriters Association International penned a letter to Spotify calling on the digital streaming platform to change its bundling option that they argue financially penalizes songwriters.

The Association of Independent Music Publishers also issued a statement calling out Spotify, saying it is attempting to circumvent a previously agreed-upon settlement that would protect songwriters' royalties.

This comes on the heels of a Feb. lawsuit filed by the Mechanical Licensing Collective against Pandora for underpayment of royalties.

Spotify's music and audiobooks bundle reduces royalty payments to songwriters

Spotify has bundled music and audiobooks into its Premium tier, which according to NSAI and AIMP, results in an estimated annual loss of as much as $150 million in mechanical royalty payments to an "already beleaguered songwriter community."

Bundles like Spotify's audio books and music package pay royalties at a different rate than music alone.

The NSAI letter, sent to the governmental affairs and creative teams at Spotify, said their decision to bundle music and audiobooks is a "perversion of the Copyright Royalty Board settlement that the Nashville Songwriters Association International (NSAI), the National Music Publishers Assn. (NMPA) and the Digital Media Assn. (DiMA) agreed to in 2022.  It counters every statement Spotify has ever made of claiming the company is friendly to creators."

Spotify said via a statement to The Tennessean that the company is on track to pay publishers and agencies that collect royalties more in 2024 than they did in 2023.

“As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers," the statement continued. "Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.”

While Spotify plans to roll out a "music only" tier that would pay royalties at the normal rate, the spokesperson couldn't confirm when that would happen.

Bart Herbison, executive director of NSAI, told The Tennessean that Spotify has an opportunity to roll back what they did. He added that if Spotify doesn't take action, the NSAI will.

"Unlike Spotify, we are reaching out in a diplomatic fashion to say we are not going to put up with this," Herbison said.

And if Spotify doesn't make the change?

"We are contemplating a variety of next moves," he said.

AIMP's statement says it is a "deeply cynical move for Spotify to attempt to circumvent the CRB settlement agreed to by the NMPA, NSAI and DiMA," calling the bundling of services a "loophole." The statement goes on to say that the price of a Spotify subscription will increase for users while cutting revenue for the songwriters who keep their business alive.

UMG TikTok dispute: UMG and TikTok make deal and some fan-favorite songs will return to the app. Here's when

Pandora: Music governing body sues Pandora for allegedly underpaying royalties

Lee Miller, NSAI's board president said he feels like Spotify is operating under a "technicality" to save money.

"It feels like their attorneys have come up with a plan that says 'if we only offer bundles, we can pay a smaller rate to the copyright holder,'" he said. "They are getting out of the deal the courts said we've already won. It's illegal what they've done and we hope powers that be will say 'you have to pay the songwriters.'"

While Spotify couldn't quantify the financial impact their bundle will have on songwriters, the company did say the $150 million figure was misleading.

Melonee Hurt covers music and music business at The Tennessean, part of the USA TODAY NETWORK — Tennessee. Reach Melonee at mhurt@tennessean.com, on X @HurtMelonee or Instagram at @MelHurtWrites.

This article originally appeared on Nashville Tennessean: Why Nashville songwriter organizations are pushing back at Spotify