Spotify Says It 'Overpaid Most Publishers' Last Year, Taking CRB Discount for Family Plans
As part of the move to adapt the Copyright Royalty Board determination that awarded songwriters a 44% increase over 5 years, Spotify has taken advantage of a new discount allowed for the family and student plans, resulting in U.S. music publishers now having to give back an undetermined amount to the service.
While the CRB announced its determination in January 2018 for the five year period that began Jan. 1, 2018, that rate determination wasn't finalized until December 2018. Now, Spotify has applied a retroactive reconciliation to its payments, by adapting the family formula discount, which counts a family as 1.5 subscribers and the student discounts as one-half a subscriber. This is an important change because previously the three-tiered formula to determine mechanical royalties didn't have such discounts for those types of subscription plans.
In Spotify's largest revenue generator, the paid-portable subscription tier, the minimum bucket, which is built by charging 50 cents per that month's total subscriber count, is typically the default bucket chosen to make payments out of, because it is usually the largest one. So as a result of the new discounts, one student plan that previously would have added 50 cents to the pot now only adds 25 cents. Likewise, the family plan would have included 50 cents for each member but now is capped at 75 cents for the entire family.