Photo Credit: David MullinsAfter 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. 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�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.�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.
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