Photo Credit: David Mullins
Spotify is quietly tightening the screws on its music-only “Basic” tier, introducing a strict new caveat: if a subscriber cancels this plan, they lose access to it forever. The move appears to be the final stage in a strategic “sunsetting” of the tier, effectively forcing users into higher-priced bundled plans while systematically slashing the royalties paid out to songwriters.
The Audiobook “Loophole”
The conflict traces back to late 2023, when Spotify integrated audiobooks into its Premium plans. By doing so, Spotify reclassified its core subscriptions as “bundled offerings” under the Phonorecords IV agreement. This reclassification exploited a legal provision allowing DSPs to pay lower mechanical royalty rates when music is combined with non-music content.
While standalone music subscriptions—like the “Basic” tier—pay a full royalty rate (often 15.35% of revenue), the bundled Premium plans allow Spotify to slash those obligations to approximately 24.5% of total content cost. For Spotify, moving users away from “Basic” is a massive financial win.
A One-Way Ticket
The “Basic” tier was originally positioned as a “steam valve” for users and rights owners who protested the bundled price hike. However, Spotify made the plan notoriously difficult to find. New language in Spotify’s support documents now confirms that “Basic” is only available to existing subscribers and carries a permanent penalty for cancellation.
“If you cancel your Basic plan, it is not possible to resubscribe to it,” Spotify’s updated policy reads. This means any user who leaves the tier will be forced to return at the $1-higher Premium rate, paying for audiobook time they may not want, while Spotify enjoys “loophole” royalty savings.
The 99% Dominance
According to DMN Pro data, Spotify Premium plans now account for 99% of total subscribers. This staggering figure highlights just how successful the company has been in buried the music-only option. By making the “Basic” tier a “limited-time” legacy offering, Spotify is ensuring that its future user base is entirely locked into the bundled model—a move that maximizes corporate profit at the direct expense of songwriter earnings.
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