The National Music Publishers’ Association projects that music publishers will “lose over $3.1 billion” through 2032 due to Spotify‘s audiobook “bundling practices”.
That’s according to Executive Vice President and General Counsel Danielle Aguirre, who, speaking at the NMPA’s 2025 Annual Meeting in New York on Wednesday (June 11), detailed how Spotify‘s decision to reclassify its premium music service as a bundled offering in March 2024 has, “by Spotify’s own numbers” resulted in a $230 million loss for publishers during its first year of implementation.
Aguirre added that “these losses will continue if we can’t reverse or correct Spotify’s actions. In fact, if we don’t stop them, we are projected to lose over $3.1 billion through the next CRB period,” which will be Phonorecords V, which determines mechanical royalty rates for 2028 through 2032.
That first-year figure ($230m) cited by Aguirre roughly correlates with the€205 million ($236m at current exchange rates) estimate published by Spotify in an SEC filing in April for the value of additional royalties it would have to pay if the Mechanical Licensing Collective (MLC) “were to appeal and ultimately be entirely successful in its case”.
The MLC sued Spotify in May last year over the streaming service’s decision to reclassify its Premium subscriptions as “bundles”. The lawsuit was dismissed in January, and the MLC asked the court in February to reconsider the dismissal.
According to Spotify’s SEC filing from April, “the additional royalties that would be due in relation to the period March 1, 2024 to March 31, 2025 would be approximately €205 million, plus potentially penalties and interest,” which the company says it “cannot reasonably estimate”.
Spotify revealed in that same SEC filing that, “on April 1, 2025, the MLC filed a request to file an amended complaint alleging that Spotify USA Inc. improperly valued the components of the Premium Service bundle and improperly reported royalties for the Audiobook Access Tier product”.
Aguirre warned on Wednesday that the CRB’s Phonorecords V proceeding is “fast approaching” and “will determine mechanical royalty rates for 2028 through 2032, a five-year period”.
The exec added: “We must make sure that digital companies cannot continue to use compulsory licenses to push down our royalty rates. One of the biggest challenges continues to come from Spotify’s mischaracterization of its music service into bundles, which forced the conversion of over 44 million subscribers into bundle platforms that those subscribers did not request.
“This negatively impacted mechanical royalty payments by attempting to exploit a loophole in the Section 115 regulations.”
The ‘Section 115’ rules cited by Aguirre refer to the compulsory license in the US, also known as the 115 License (because it is stipulated under section 115 of the Copyright Act), which allows eligible digital services to use copyrighted music for a set fee without having to negotiate directly with rightsholders.
The reclassification is significant because under a 2022 legal settlement called Phonorecords IV, music publishers and music streaming services agreed that ‘bundle’ services in the United States are permitted to pay a lower mechanical royalty rate to publishers and songwriters than standalone music subscription services.
‘Phonorecords IV’ set the on-demand streaming mechanical rates in the US for the five years between 2023 and 2027.
Under the CRB IV or Phonorecords IV, songwriters and music publishers are paid a headline rate of 15.35% of a given interactive streaming service’s US revenue from 2023 through 2027.
Elsewhere during her presentation, Aguirre revealed a stat related to Spotify rival Amazon Music‘s decision in November to bundle audiobooks with its Premium subscription.
The exec told the audience: “Last year, [the NMPA] warned that if left unchecked, other services will try the same tactics as Spotify. And that has now happened. Amazon recently followed suit and has forcibly converted their music subscribers into similar bundled plans.”
According to Aguirre, Amazon “recently followed suit and has forcibly converted their music subscribers into a similar bundled plan”.
Aguirre reports that “in just the last three months, we’ve seen a 40% decrease in music revenue from Amazon”. Aguirre says Amazon’s latest action “has hit the PROs particularly hard.”
Aguirre’s statement contrasted that of NMPA President & CEODavid Israelite, who said in November 2024 — right after Amazon started bundling its music streaming service with audiobooks — that the NMPA is “optimistic about the new Amazon bundle”.
At the time, Israelite said: “Amazon has engaged with the music publishing and songwriting industry in a respectful and productive way, unlike Spotify.
“We expect this new Amazon bundle will not decrease revenue for songwriters. Unlike Spotify, Amazon is looking at music creators as business partners and seeking to have a deal in place before the first round of royalty payments.”
“Spotify and Amazon have used bundling tactics to reduce how much they pay songwriters, and while they manipulation of the system has resulted in a reduction of mechanical royalty payments, and we continue to fight against bundling.”
Danielle Aguirre, NMPA
Speaking on Wednesday, Aguirre said: “Spotify and Amazon have used bundling tactics to reduce how much they pay songwriters, and while they manipulation of the system has resulted in a reduction of mechanical royalty payments, and we continue to fight against bundling, I want to emphasize something important.
“Even with that pressure, mechanical revenue still grew last year. But imagine how much stronger that growth could have been if those tactics had not been deployed.”
Aguirre’s presentation revealed an estimate that mechanical royalties will reach $14 billion from 2021 to 2032.
Added Aguirre: “Do not mistake our growth for appropriate growth or fair growth, or healthy growth. You can be growing, but not representing true value. Because this is such a large revenue category, and it continues to grow, the CRB V proceeding is critical to the success of our industry.
“This is an important moment for the future of mechanical rights and fair compensation, and we are preparing for the battle ahead, and we need your support to ensure that the Phono V outcome reflects the fair value of your songs.”Music Business Worldwide
