Spotify is now taking serious issue with Digital Music News’ assertion that ‘Basic’ is getting buried from would-be subscribers.
Spotify has every incentive to bury its newly launched, unbundled ‘Basic’ subscription tier. But does that mean Spotify is intentionally hiding ‘Basic’ from would-be subscribers to steer them into its more lucrative bundled options?
Given the economics, it’s hard to imagine Spotify not wanting to bury its Basic tier. Not only are bundled plans more expensive, but they’re also substantially cheaper when it comes to royalty payments (and for proof of that, look no further than the hard data outlined in this DMN Pro report).
That may explain why Spotify has shifted more than 98% of its plans into bundles, according to our just-released Bundling Barometer.
Over the past few weeks, Digital Music News found overwhelming evidence that Basic is being buried. In response, Spotify has begged to differ and demanded corrections. We’re unsure if Spotify is helping or hurting their case here, but let’s air this out.
Perhaps the biggest tell is that new subscribers cannot subscribe to a Basic, unbundled plan. Despite the quibbling over details, Spotify didn’t dispute this critical fact.
“Basic plans are only available to existing subscribers,” a Spotify representative confirmed to Digital Music News.
Not only are newer subscribers forced into bundled tiers, but they are also unlikely to downgrade into a Basic, un-bundled tier after initially subscribing. The main reason? Few will know a simpler and cheaper plan exists — unless they accidentally stumble upon this option.
These ‘stumble upon’ moments would include revisiting the subscriber options page while logged in, clicking through other subscription options in the ‘Account’ page, or hearing about the cheaper option from a friend, forum, or other source. In all likelihood, only a tiny percentage of new subscribers will encounter the Basic option after subscribing to a bundled tier, and of those, only a subset will take action.
Spotify did note that both Family and Duo bundled Premium plans can be downgraded into Basic options, something we said didn’t exist.
The company also stated that it email-blasted all of its subscribers about the expanded option, though we somehow didn’t receive that email (and it didn’t land in our spam folder).
(On this last point, we did receive a note titled ‘Information about your plan’ on June 21st, which low-key informed us of a $1 price hike. This actually had some information about the Basic downgrade.)
None of that adds up to ‘shouting from the rooftops,’ though Spotify is trying to make the case that Basic isn’t being buried. But why are they doing this?
And why launch Basic at all if the real money is in bundling?
There may be a few motivations at work here. Spotify has been lambasted by music publishers over its sneaky, royalty-cutting shift into bundling. They have also been sued (by the Mechanical Licensing Collective) and referred to federal regulators (specifically the FTC) over this shift.
The National Music Publishers’ Association (NMPA) is also stirring trouble for Spotify: NMPA chief David Israelite is already pushing for changes on Capitol Hill following Spotify’s shift while dangling the threat of litigation against the platform for separate infringement claims (specifically related to Spotify’s lyrics, music videos, and podcasting diversifications).
But what if Spotify can simply point to a bundle-free Basic option? After all, if subscribers have a choice between bundled and unbundled, then Spotify is merely serving the marketplace instead of abusively steering people towards royalty-lowering bundles.
Meanwhile, there are rumblings that the NMPA is preparing to litigate against the aforementioned infringement allegations. But that’s a whole ‘nother can of worms.
Stay tuned.
