The National Music Publishers Assn. has filed a legal complaint with the Federal Trade Commission against Spotify, primarily to oppose its recent plan to bundle music and audiobooks, which will result in a lower mechanical royalty rate for songwriters and artists, estimated to be a $150 million annual loss. Spotify has confirmed that a lower royalty will result, but claims that earnings for creators will continue to rise.
“Spotify has deceived consumers by converting millions of its subscribers without their consent from music-only subscriptions into ‘bundled; audiobook-and-music subscriptions, publicly announcing increased prices for those subscriptions, failing to offer an option for subscribers to revert to a music-only subscription, and thwarting attempts to cancel through dark patterns and confusing website interfaces,” the letter reads in part. “This bait-and-switch subscription scheme is ‘saddling shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase.’ Indeed, it has all the red flags of problematic negative-option practices that the FTC has consistently warned companies about: (1) Spotify has failed to give consumers all material information about its subscription plans up front; (2) Spotify has billed consumers without their informed consent; and (3) Spotify has made it hard for consumers to cancel.
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