Spotify’s Audiobook Bundle Royalty Model To Reportedly Pay Songwriters $150 Million Less During First Year

According to consequence.net, Spotify’s upcoming changes to their subscription tiers will allow the streaming service to use new royalty model that impacts songwriter payouts. A new Billboard report has estimated that songwriters will be paid about $150 million less during the first year of its implementation in comparison to the previous rate.

As Bloomberg reported last month, Spotify will raise the prices by $1 per month for individual plans and $2 per month for shared plans. The price  increase will help subsidize the cost of bundling 15 hours of audiobooks per month as part of paid plans. Instead of raising royalty rates, Spotify will pay a  “bundle” rate to songwriters for streams from premium subscribers to further offset the cost of book licensing.

This will allow Spotify to value music at about “52% of the total bundle, or around $5.70 per subscriber” for the current $10.99 plan including audiobooks. According to Billboard’s calculations, “songwriters and publishers will earn an estimated $150 million less in US 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.”

The change to royalty payouts follows after Spotify announced last October that they would require artists to hit a minimum of 1,000 streams before receiving compensation as part of an effort to crack down on fraudulent and “non-music audio content.”