Spotify’s ‘Basic’ plan, a fleeting option for music-only access, is disappearing as the company consolidates its bundled offerings.
In late 2023, Spotify made waves by incorporating audiobooks into its Premium Individual, Family, and Duo plans. This shift led to the reclassification of these tiers as ‘bundled subscription offerings’ under the Phonorecords IV agreement, which governs the relationship between publishers, songwriters, and digital service providers (DSPs). With this change, Spotify tapped into a provision that permits lower mechanical royalty rates for platforms combining music with non-music content.
However, the move caused discontent among streaming music subscribers and rights holders, prompting Spotify to introduce a non-bundled plan called ‘Basic’. This option, though available, was notoriously difficult to find. Its existence seemed more of a signal from Spotify that a non-bundled, cheaper alternative was out there, rather than a genuine effort to provide an easily accessible choice.
Under the new bundled structure, mechanical royalties for publishers and songwriters are primarily determined by a pro rata formula that distributes revenue from bundled subscriptions. In contrast, the separate Basic tier required Spotify to pay the standard rate of about 15.35% of revenue, while the bundled plans reduced those payouts to around 24.5% of the total content cost.
To maintain access to music-only content at a reduced price of $1, users had to actively seek out the Basic plan and downgrade their subscriptions. The challenge in locating this option was likely intentional, as Spotify benefitted from the scenario. Subscribers began opting for the Premium plans, which included limited audiobook access, while Spotify’s royalty obligations significantly decreased.
Now, it seems the Basic option was a temporary fix. Spotify recently issued statements indicating that the Basic plan is not going to be a permanent feature. Their communications clearly state, “Basic is available for previously existing Premium subscribers,” signaling its imminent discontinuation.
Spotify’s support documents clarify, “Eligible subscribers will see Basic as an available plan on their account page. If you cancel your Basic plan, it is not possible to resubscribe to it.” This statement underscores the reality that the Basic tier was not a long-term offering.
The rationale behind the existence of the Basic plan appears to be a mechanism for users wanting to sidestep the bundled Premium option. Essentially, it provided an illusion of a standalone choice while allowing Spotify to minimize its royalty obligations. Currently, Spotify Premium plans dominate, accounting for 99% of the total subscriptions, according to DMN Pro data, illustrating how little they wanted consumers to be aware of the music-only subscription option.
