Top Stories Tamfitronics Spotify’s hard shift toward bundling and its associated loopholes have officially started hitting publisher royalty statements, according to documents shared with Digital Music News this week. So far, it looks like Spotify has taken an extreme turn toward cut-rate bundling recategorizations—here’s a look at the preliminary statements.

Last week, Digital Music News calculated that Spotify accounts for an impressive 42% of all mechanical royalties paid in the U.S., based on a tranche of confidential royalty statements from February of 2024. Now, it looks like that percentage is going to drop significantly, thanks to an extreme shift towards bundling that is now impacting music publisher bank accounts.

And make no mistake—this is now impacting music publisher wallets in a serious way. Earlier, sources to Digital Music News noted that Spotify’s ‘bundle-apocalypse’ was slated to start during the March reporting month. Now, roughly 45 days after the close of that reporting period, those tips have proven accurate, with dramatic shifts towards bundled subscription packages appearing in preliminary statements shared with Digital Music News by a major music publisher.

This means that despite a contentious lawsuit filed by the MLC and multiple regulatory complaints lodged by the National Music Publishers’ Association (NMPA), Spotify is pushing full steam ahead with its aggressive bundling shift—with fairly drastic conversions and royalty drops officially in motion.

Spotify definitely isn’t tapping the brakes on this one—separate sources have relayed that the streaming platform is fully prepared to battle with music publishers and regulators to sustain their bundling recategorizations. But what’s the damage in hard numbers?

Before we dive into the hard data, our sources noted that royalty figures are still preliminary and not final. So stay tuned for more detailed analyses and number-crunching on these declines. But after a preliminary review of several statements, DMN can report that there’s clearly a major cliff ahead for publishing payouts—with an enormous percentage of subscription accounts bundled in one form or another.

For now, Digital Music News can confirm that nearly 97% of Spotify subscription accounts are now categorized as bundles in the United States, with associated per-stream mechanical royalty drops.

That includes a shift of nearly 100% of all Family and Duo plans, with a substantial chunk of the all-important Individual subscriber plans also transitioning.

Digging a bit deeper into the Individual subscriber shifts: for the March reporting period, Spotify has transitioned slightly more than 20 million Individual subscriber accounts into bundled plans. During the February statement, the last non-bundled period, total Individual subscriptions topped 20.16 million in the United States.

Spotify Stands to Gain at Least Half-a-Billion a Year From Its Latest Price Increases In the U.S. Alone. Music Publishers Won’t Be Seeing Much of That.

Interestingly, Spotify is still counting another 869,912 Individual accounts as non-bundled in their March tallies. These subscribers may have jumped on an opportunity to forego the audiobook bundle and revert to the $10.99 price point – though, in full disclosure, we’re not entirely clear how that process worked.

Looking ahead, sources have noted that Spotify is expected to release a music-only option in the United States, with subscribers potentially having the option to downgrade into a non-audiobook, music-only option for $1 less a month.

As we reported earlier, certain U.K. subscribers evidently have the option to pay £10.99 per month (not £11.99) for the solo plan by giving up audiobooks, with a stateside rollout potentially next.

Spotify identified 4.17 million audiobook-bundled Duo accounts in March, up from 3.86 million in February. Audiobook-bundled Family accounts, for their part, numbered 5.65 million in March, up from 5.27 million in February.

Notably, following the March transition, virtually zero non-bundled Duo or Family plans now exist. The tiny numbers of non-bundled Duo and Family plans may simply be reporting errors.

In terms of what this means for publishing payouts, it now appears that the damage may be greater than anticipated. Earlier, the music industry pegged the bundling royalty decline at $150 million annually. However, based on preliminary royalty drops reviewed this week, DMN’s back-of-the-envelope calculations now peg that figure well past $160 million.

Meanwhile, NMPA chief David Israelite has been highly vocal about the issue, describing the bundling shift as a “war on songwriters.”

During the NMPA’s recent annual meeting, Israelite promised an “all-encompassing” response to what he sees as Spotify’s aggressive bundling strategy. This response includes a lawsuit filed by the Mechanical Licensing Collective (MLC) challenging the bundling reclassifications and seeking unpaid royalties.

The NMPA has also lodged a complaint with the FTC and various state attorneys general to investigate Spotify’s alleged “unfair and deceptive practices.”

Israelite noted that the organization would continue to advocate for federal legislation to allow direct publisher negotiations with digital service providers (DSPs). During the meeting, he also pointed to an MLC audit of Spotify to uncover any discrepancies in royalty payments, as well as licensing disputes related to videos, lyrics, music in podcasts, and other unauthorized uses.

Spotify has publicly defended its actions, stating that its approach to bundling and pricing is industry standard. The company emphasizes that it notifies users in advance of any price increases and offers multiple plan options.

Sources to DMN have also indicated that Spotify plans to battle the NMPA on all fronts and remains confident that they will prevail in various legal and legislative disputes. Amicable agreements are always possible, but we’re not hearing about any conciliatory chats at the moment.

Separately, Spotify has raised its prices in the United States yet again.

According to DMN Pro calculations, that will generate at least half-a-billion more dollars annually for the platform. But thanks to bundling shifts, music publishers will see little of those gains.

More as this develops.