Photo Credit: David Mullins
Spotify’s ‘Basic’ music-only subscription now comes with an important caveat: if you cancel it, you’ll lose access to the tier forever. Is Spotify simply sunsetting this tier — and further slashing songwriter royalties?
After Spotify integrated audiobooks into its Premium Individual, Family, and Duo plans in late 2023, it reclassified these tiers as ‘bundled subscription offerings’ under the Phonorecords IV agreement between publishers, songwriters, and digital service providers (DSPs). This move allowed Spotify to exploit a Phonorecords IV provision that allows lower mechanical royalty rates for services that combine music with non-music content, such as audiobooks.
Of course, not everyone was happy with these changes. So, for streaming music subscribers and rights owners who protested, Spotify offered a non-bundled option called ‘Basic’. The tier has always been nearly impossible to locate, though its mere presence allowed Spotify to signal that a non-bundled (and cheaper) option exists.
With the bundled shift, publishers and songwriters now mostly receive mechanical royalties from Spotify via a pro rata formula that allocates bundled revenue. By stark contrast, standalone music subs like Spotify’s ‘Basic’ tier pay the full rate—often 15.35% of revenue. Meanwhile, bundled plans under Spotify’s Premium tiers slash those royalties to about 24.5% of total content cost.
Starting in late 2023, Spotify made ‘bundled plans’ the default option for all of its Premium subscribers — with substantial ‘loophole’ royalty savings soon piling up.
As part of that transition, those who wanted to maintain music-only access (and a $1 discount) had to seek out the ‘Basic’ plan and downgrade their subscriptions. We found it challenging to find the buried ‘Basic,’ and that was probably intentional. For Spotify, the result was a big ‘win-win,’ as subscribers quickly started paying a $1 surcharge for limited audiobook access while Spotify’s royalty obligations plummeted.
Now, it appears that Spotify’s Basic plan was merely a temporary option. And for those exiting the plan, some important verbiage now applies.
Photo Credit: Spotify
And for those just arriving, there’s also new language surrounding Basic.
“Basic is available for previously existing Premium subscribers,” Spotify now describes, while reaffirming the sunset.
“Eligible subscribers will see Basic as an available plan on their account page,” Spotify’s support document reads. “If you cancel your Basic plan, it is not possible to resubscribe to it.”
Digital Music News reached out to Spotify about this language but received no response. As it stands, DMN can confirm that canceling a Basic subscription will remove the option to resubscribe at this tier, meaning anyone who cancels a Basic subscription will only have a Premium bundled subscription option (and a $1 additional monthly charge) in the future. This limitation forces subscribers to pay for audiobook listening time they may not want or utilize.
But why did Basic exist in the first place?
Spotify appears to have set up the Basic pipeline as a steam valve for those who wanted to avoid the Premium bundled plan. As mentioned, it also created the appearance of a non-bundled option, which Spotify used to downplay its discounted royalty plan. Now, that plan is shifting from hidden to relatively nonexistent.
At present, Spotify Premium plans account for 99% of total subs, per DMN Pro data, highlighting just how little Spotify wanted the general public to know about the option to subscribe to a music-only plan.
