The National Association of Music Publishers (NMPA) asserts that Spotify’s financial gains in the first quarter of 2025 come at the expense of songs in the United States. This is primarily due to the streaming service’s choice to market their premium subscriptions as “bundles.”
On Tuesday (April 29), Spotify announced that it had reached 268 million Premium subscribers in Q1 2025, adding 5 million paid users since December, surpassing its own forecast of 3 million subscriptions.
The total quarterly revenue for the first quarter increased by 15% year in constant currency, amounting to € 4.190 billion (approximately 4.4 billion dollars). Furthermore, revenue from premium subscribers grew by 16% year in constant currency to € 3.771 billion (around 3.968 billion dollars).
Additionally, the streaming giant reported a record quarterly operating profit of € 509 million (about 535.6 million dollars).
Concerns Raised by the NMPA
“The recent global growth of Spotify’s subscribers and revenue is being subsidized by American songwriters,” stated David Israelite, President and CEO of NMPA, in a statement released shortly after the quarterly figures were made public.
“The reality is that their international user base is growing, but these consumers are paying very little.”
“The recent global subscriber and revenue growth is subsidized by American songwriters.”
DavidIsraelite, NMPA
The statement continued: “Their revenue growth of 15% is largely due to undermining the rights of song authors based on their internal association policy.
“This strategy connects music with audiobooks to devalue songs and provide significantly lower royalty rates to songwriters.
“Don’t be fooled by headlines suggesting that Spotify’s growth comes from something other than attempts to pay music creators less in the United States.”
The dispute between copyright owners and Spotify was highlighted when the platform combined its audiobook service with its music streaming offerings last March.
This move controversially resulted in Spotify paying a lower mechanical royalty rate to publishers and songwriters in the U.S.
This reduction stems from a legal settlement established in 2022 called PhonoRecords IV, in which music publishers and streaming services agreed that “bundled” services in the U.S. could pay lower mechanical royalties than standalone music subscription services.
Nonetheless, Spotify’s total revenue from subscriptions and advertising—amounting to € 4.190 billion (4.4 billion dollars) for the first quarter—indicates that the reduction in publisher payments does not translate to increased revenue for the streaming service.
In May, the Mechanical Licensing Collective (MLC) initiated court proceedings against Spotify regarding the decision to bundle its premium subscriptions as “packages.”
The lawsuit was dismissed in January, and MLC subsequently sought a revision of the dismissal in February.
In its Q1 financial report, Spotify referenced this legal dispute in a section on “unforeseen circumstances.”
Spotify also indicated that on April 1, 2025, the MLC submitted a request to file a corrected complaint, claiming that Spotify USA Inc. misrepresented elements of the Premium Service package and inaccurately reported royalties for the Audiobook Access Tier product.
The update from Spotify further added that “MLC reserves the right to appeal the initial decision following the new claims.”
Spotify also evaluated the potential costs of additional fees it may be required to pay “if the MLC appeal ultimately succeeds.”
According to Spotify’s SEC filing, “additional fees owed for the period from March 1, 2024, to March 31, 2025, are estimated to be approximately € 205 million plus potential penalties and interest,” which the company claims it “cannot reasonably estimate.”
In a statement issued following the January ruling that dismissed the MLC’s case, a Spotify representative remarked: “We are pleased with this outcome, which indicates that after thorough judicial review, the Spotify service is correctly categorized as a bundle and offers valuable content alongside music.
“Bundled offerings play a critical role in driving interest in paid music subscriptions and expanding the market for the music industry. While we are aware that the regulations can be complex, there are numerous opportunities for collaboration—our recent agreement with UMPG exemplifies how direct licenses can provide flexibility and additional benefits.”
The Spotify representative referred to the new long-term arrangement the company entered with Universal Music Group in January, which included a new direct agreement with Universal Music Publishing Group. This agreement also included a new royalty structure that altered the previous arrangement concerning mechanical fees in the States.
In February, Warner Music Group and Spotify also signed a new long-term licensing deal that confirmed sources. This payment structure is referred to as the “Bundled Rate.”
The bundling issue is not the only grievance that the NMPA has against Spotify.
In May 2024, NMPA sent a letter to Spotify, stating that the streaming platform “displays songs and reproduces and distributes musical clips and podcasts using musical works” without obtaining permission or compensation from songwriters and publishers.
“Don’t be fooled by headlines suggesting that Spotify’s growth is genuine; it comes from attempts to undercut payments to music creators in the United States.”
DavidIsraelite, NMPA
In February, the NMPA, which represents American musicians and songwriters, announced that it was initiating an “extensive” action against Spotify, accusing the platform of disregarding widespread copyright violations related to the podcasts it hosts.
“Spotify has thousands of unlicensed songs in its podcasts, and it has done nothing to rectify this issue,” stated Israelite at that time.
The “Removal Program” includes 19 participating NMPA publishers, including the publishing arms of the three major labels: Sony Music Publishing, Universal Music Publishing Group, and Warner Chappell Music.
The NMPA contended that Spotify has been aware of copyright violations by podcasters “for many years” but has “not taken significant actions” to address the situation.
In its Q1 report, Spotify noted that “musical and podcast growth was due to increased impressions sold, partially offset by pricing softness and optimization of our podcast inventory in our owned and licensed portfolio.”
Spotify’s CEO DanielEk reported to analysts during the earnings call that the Spotify Affiliate Program, a new monetization system for video content launched in January, resulted in the company paying 100 million dollars to podcast creators in just the first quarter.
“When we added podcasts to the platform, there were numerous questions and concerns. Many speculated that podcasts would cannibalize music, and so forth. However, what actually transpired was that we observed increased engagement and retention, leading to a decrease in churn right across the board.”
Ek continued, “Similarly, with the addition of audiobooks, we again witnessed a comparable trend. Users who listened to music also tended to listen to podcasts and audiobooks, resulting in increased engagement compared to those who only engaged with one medium.”
During the call, Ek hinted that Spotify continues to expand its “Audiobook in the Premium” offering, aiming to reach more regions and implement tools that enhance interactions between users and creators.
Lucas focuses on the interaction between music and society. He specializes in how music influences and reflects cultures, analyzing the role of sound in social, political, and cultural events around the world.
