Maybe it’s just a slip — or maybe it’s a serious dip. But according to preliminary Spotify royalty stats shared with Digital Music News by multiple US-based publishers, we may have a problem here.
Spotify’s mechanical publishing royalties took a sudden-and-sizable dip this month for many US-based publishers and songwriters, according to preliminary stats shared with Digital Music News over the past few days. That includes multiple reports of 30-40% drops as compared to previous months — all specifically tied to US-based mechanical publishing royalties.
By law, mechanical licensing royalties are remitted by Spotify and processed through the Mechanical Licensing Collective (MLC). But the same organization manages broader publishing calculations involving both mechanical and performance licenses, which are interrelated in the streaming realm. For reasons that are currently unclear, performance royalties jumped dramatically in January for these same publishers, shifting the ratio between the two licenses.
This issue appears to be isolated to Spotify and not happening at any other DSPs — but we’ll keep you posted if similar issues surface on other platforms.
It’s also important to stress that it remains unclear what exactly is causing the drop and shifts — and this might be attributable to an error or methodology change. At press time, DMN had connected with Spotify via email on the matter, but the streaming platform has yet to issue a statement. We’re hoping to confirm a time to discuss the matter on the record with a Spotify executive.
Diving further into the weeds, the payment drops are specifically tied to plays in October of 2024, with January of 2025 being the payout month.
One publisher told DMN that the drops weren’t tied to a specific artist, genre, or region, but were ‘across-the-board’. Furthermore, none were aware of any special adjustments or changes in their royalty calculations, and none tied the declines to usage drops. In fact, Q4 is often a time of streaming increases for many publishers, depending on their catalogs.
As for the massive shift towards performance licenses, nobody had any answers.
The declines applied to specific streams and the aggregate amounts, with both declining a ‘very large and substantial amount’ compared to previous, late-2024 payments.
The development closely follows some eyebrow-raising stats — published exclusively on DMN Pro — showing an extreme shift by Spotify towards bundled subscription options.
Amazingly, music-only, non-bundled subscriptions now account for fewer than 1% of all US-based subscriptions. That’s trivia for most, but not for publishers and songwriters, who receive substantially lowered mechanical royalties on bundled plans.
Back to the present decline: sorry if we’ve ruined the weekends of any accounting teams — but hopefully this one gets sorted out.
More as this develops.