NMPA Projects $3.1B Loss From Spotify Bundling Through 2032
By Trevor Loucks
Founder & Lead Developer, DynamoiTrevor Loucks is the founder and lead developer of Dynamoi, where he leads coverage at the convergence of music business strategy and advertising technology. He focuses on applying the latest ad-tech techniques to artist and record label campaigns so they compound downstream music royalty growth. trevorloucks.com
The National Music Publishers' Association dropped a bombshell at its annual meeting Wednesday: Spotify's audiobook bundling strategy will cost songwriters and publishers $3.1 billion through 2032.
The trade organization revealed that Spotify's decision to reclassify Premium subscriptions as audiobook bundles has already cost the industry $230 million in its first year alone.
Why it matters:
This represents the largest financial threat to music publishing revenues since the streaming transition began.
- Scale impact: The $3.1 billion projection covers the next Copyright Royalty Board period through 2032.
- Precedent concern: Amazon has already followed Spotify's lead, causing a 40% revenue drop from that platform.
- Legal complexity: The bundling exploits regulatory loopholes in mechanical royalty calculations.
Zoom in:
The bundling mechanics
Under the 2022 Phonorecords IV settlement, bundled services pay significantly lower mechanical royalty rates than standalone music subscriptions.
Spotify's individual plan mechanicals dropped from $15.78 million in February to $9.58 million in March 2024—the month bundling launched.
Industry ripple effects
Sony Music Publishing reports mechanical payments from Spotify fell 20% since bundling began.
Over 44 million Spotify subscribers were reclassified as bundle users without requesting the change.
By the numbers:
- $230 million lost in first year of Spotify bundling
- $3.1 billion projected losses through 2032 if practice continues
- 40% revenue decrease from Amazon after its bundling launch
- 72% of U.S. publishing income operates under "burdensome regulations"
The catch:
Legal challenges have so far failed to stop the practice.
A federal judge dismissed the Mechanical Licensing Collective's lawsuit against Spotify in January, ruling the bundling regulations were "unambiguous."
The NMPA admits that despite initial optimism about Amazon's "respectful" approach, that platform's bundling has also hurt publisher revenues.
What's next:
The Phonorecords V proceedings at the Copyright Royalty Board will determine mechanical rates for 2028-2032, making the next six months critical for the industry.
NMPA CEO David Israelite called for unprecedented industry unity: "There has never been a greater need to stand up for the value of songwriters."
The organization is also targeting B2B music services, sending cease and desist letters to six companies allegedly using unlicensed music.
The bottom line:
Streaming platforms have found a legal way to dramatically reduce songwriter payments through product bundling.
With Amazon following Spotify's playbook and more platforms likely to follow, the window for publishers to secure fair compensation is rapidly closing.
