Senators call for FTC investigation into Spotify bundled subcriptions

U.S. Senators Marsha Blackburn and Ben Ray Lujan sent a letter to Andrew Ferguson, Chairman of the Federal Trade Commission, requesting an investigation into Spotify (SPOT) for converting premium subscriptions into higher-priced bundled subscriptions without consumers knowledge or consent. The letter said, in part, “Millions of Americans who love and pay for music depend on a healthy, well-functioning market built upon fair prices and compensation through the music royalty system. We have serious concerns about Spotify’s recent move to convert all of its premium music subscribers into different-and ultimately higher-priced-bundled subscriptions without their knowledge or consent. These actions harm consumers and could deeply damage the marketplace and the music royalty system. We urge the FTC to investigate the impact of Spotify’s recent actions, to take steps to protect Americans from being forced into subscriptions without notice or choice, and to safeguard the music marketplace…Tens of millions of Americans pay monthly fees for access to Spotify’s premium, ad-free, subscription music service through its ‘Premium Plans.’ The royalty rates that Spotify and other digital music service providers must pay songwriters and music publishers reside in federal regulations set by the Copyright Royalty Board. Current regulations allow digital music providers to pay a lower music royalty rate if their paid music subscription offering is bundled with other legitimate product offerings. Seeing an opportunity, Spotify has exploited this regulation by converting all Premium Plan music subscribers into a new, bundled subscription offering without consumers’ consent or any notice. Spotify’s intent seems clear-to slash the statutory royalties it pays to songwriters and music publishers. Not only has this harmed our creative community, but this action has also harmed consumers.”