In response to its recent price hike, Spotify has unveiled a new basic streaming plan for users in the United States. This plan offers the same streaming capabilities as the premium plans but excludes monthly audiobook listening time, at only one dollar per month less.
Spotify’s recent price increase on its premium plans, which now range from $11.99 to $19.99, was the company’s second in one year, as it moves to enhance profit margins by cutting marketing expenses and reducing workforce, alongside increasing subscription costs.
The music streamer is reportedly planning to launch an even higher-tier plan later this year, that would cost an additional $5 per month and include hi-fi audio quality and new features for playlist creation and song library management.
Spotify has drawn sharp criticism from industry groups like the National Music Publishers Association and the Nashville Songwriters Association International, who have accused Spotify of undermining songwriters’ earnings as it modifies US mechanical royalty payments by saying its audiobook offerings make it a “bundled subscription.” As such, it qualifies for a lower royalty rate under Phonorecords IV, potentially saving $150 million.
Despite this, Spotify maintains that it will continue to increase overall payments to publishers and societies in 2024, arguing that the practice of paying lower rates for bundled services is common among digital service providers.
The new payment structure is set to took effect in March.
