In June, National Music Publishers’ Association (NMPA) executives reported at the organization’s annual meeting that U.S. music publishers and their songwriters have missed out on nearly $500 million in mechanical royalty payments since Spotify and Amazon rolled all of their paid music subscribers into bundled plans. In the wake of that announcement, Billboard analyzed Spotify’s reports to the Mechanical Licensing Collective for the fourth quarters of 2023 and 2025 and found that the blended per-stream mechanical rate from its subscriber tiers decreased by about 51%, while overall dollar payments for that license declined about 45%.

While publishers tend to look at total publishing payments for their repertoire, songwriters and artists tend to look at per-stream rates as well. With that in mind, Billboard took into account both parameters and — specifically looking at Spotify paid subscriber tiers — found that the mechanical per-stream pay rate declined 51%, from about $0.00068 per stream in Q4 2023 to about $0.00033 per stream in Q5 2025. Meanwhile, the mechanical dollar amount paid by Spotify decreased 45%, from about $97.3 million in Q4 2023 to about $53.3 million in Q4 2025, using rounded numbers.

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The reason for the above percentage discrepancy is due to the fact that the number of subscribers and the amount of streams each subscriber generated every month increased between the two periods, resulting in the overall number of streams growing by nearly 19.3 billion streams — from nearly 143.6 billion streams by Spotify subscribers in Q4 2023 to nearly 162.9 billion in Q4 2025.

All the above data is mainly based on calculations supplied by the law firm Manatt Phelps & Phillips, which compiles the Manatt Music Streaming Royalty Calculator, and was verified by Billboard, which compiled its own spreadsheets based on Spotify streaming reports to the Mechanical Licensing Collective for the cited time periods. (For this story, Billboard is specifically focusing on Spotify; while Amazon also uses bundling, which has similarly resulted in smaller mechanical payments, the losses are much smaller than the lost payments from Spotify.)

According to Spotify’s own financial 6-K statement for the period ending March 31, 2026, the company acknowledged it had a potential 410 million euros ($471 million) liability for the period of March 1, 2024, when it rolled out bundling, through March 31, 2026, if an amended lawsuit by the Mechanical Licensing Collective on the issue proves successful. 

Moreover, the mechanical payment issue for bundled tiers is expected to be a big one in the Copyright Royalty Board’s ongoing Phono V rate determinations — covering the period of Jan. 1, 2028, through Dec. 31, 2032 — which kicked off in January of this year. 

“What we’re seeing in the latest data should be a wake-up call for songwriters and publishers,” Manatt Entertainment group leader Jordan Bromley said in a statement. “Mechanical royalties — particularly on Spotify — have dropped dramatically over the past two years, not because music is being played less, but because of fundamental changes in how these royalties are calculated. But here is the good news: as we speak, songwriters, publishers and DSPs (including Spotify) are in negotiations for new rates. Now is the time to set the record straight and ensure a future for working songwriters in the United States.”

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While publishers and songwriters may have missed out on a chunk of revenue over the two-year period covering 2024 and 2025 due to bundling, beginning in 2026, Spotify — after doing what sources say are direct deals with the majors and some large publishers for additional rights for video and lyrics — has also done direct deals via the NMPA and the Harry Fox Agency. According to sources, these deals allow independent publishers to opt in and license those additional rights, which are not covered by the compulsory mechanical license or the Music Modernization Act.

Those deals are so far generating bigger payments than expected, some independent publishers tell Billboard. One indie publisher suggests that the new licensing option carries the implication that Spotify is attempting to put some money back in the publishers’ and songwriters’ pockets on a “good faith basis.” However, another indie publisher says that’s too generous an assessment, because for that direct deal payment, Spotify is getting additional rights. However, he does agree that those payments somewhat offset the sting of the mechanical payments lost due to bundling.

According to an NMPA spokesperson, “While direct deals for video have helped fill the almost half-a-billion-dollar hole from bundling, since those are completely different rights, the bundling deficit remains. Income from video should be on top of what Spotify must pay songwriters for interactive streaming — not instead of.” 

Even as some publishers say they are somewhat mollified by the incremental payments from audiovisual licensing, they are still angry that Spotify unilaterally put then-existing music subscribers into a bundled tier with audiobooks that ultimately allowed it to reduce mechanical payments. 

This bundling issue, as mentioned, will be front and center during the CRB Phono V rate determination. Or, as NMPA chief legal officer and COO Danielle Aguirre put it at the annual meeting, “We will be working hard at the Copyright Royalty Board proceeding to address the issues around DSP bundling and to make sure that regulations cannot be manipulated.”

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During her talk at the meeting, Aguirre brought up another way that bundling has hurt music publishers and songwriters. “What was in 2024 a DSP-wide royalty distribution of 55% mechanical to 45% performance has flipped to now 53% performance and 47% mechanical due solely to the bundling implemented by Spotify and Amazon,” she explained. “This is concerning because mechanical royalties, as you guys know, are paid through the MLC, and the MLC does not take out a commission or any fee from you for administration of mechanical rights…you are receiving 100% of them.”

During the Q4 periods examined by Billboard, that switch is even more dramatic. While mechanical accounted for nearly 55.4% of payments to publishers versus 44.6% for performance royalties by Spotify in Q4 2023, in Q4 2025, that had reversed to nearly 33.25% mechanical versus 63.75% performance royalties.

How does bundling allow Spotify to pay less in royalties?

First, let’s look at the complex multi-step formula for determining mechanical payments. Initially, the formula uses two prongs to determine what it calls the all-in pool for mechanical and performance royalties. (Performance licensing has been predetermined outside the mechanical process through rate negotiations between Spotify and the performance rights organizations, so that paid amount is a known quantity and reported by Spotify in monthly reports for each of its tiers.) The all-in pool is the greater of either the headline rate (which in 2025 was 15.25% against total revenue) or the percentage of total content cost — the royalty Spotify pays to record labels — which is currently 24.50%.

Due to Spotify bundling, the first pool truncates total revenue because bundling allows a digital service provider to attribute revenue differently. So if a music subscription, for example, costs a subscriber $10 on a stand-alone basis and an audiobook subscription costs a subscriber $9 on a stand-alone basis (these prices are made-up to show the math), that means music revenue comprises 52.6% of total revenue, allowing the DSP to apply the 15.25% prong against a greatly reduced revenue total. 

Sources say that while the above dollar amount quotes prices as an example, the resulting percentage is spot on, noting that bundling allows Spotify to reduce total revenue from 100% to 52.6% of the total for that prong. That has an impact on the overall all-in pool. In 2023, the total revenue prong was dominant in the formula for the Spotify tiers, but in 2025, the total content pool turned out to be the all-in prong the vast majority of times due to the aforementioned reduction in the revenue total.

That’s not all that impacted the Spotify mechanical payments. Once the all-in pool has been established, the performance royalties are subtracted from that pool, and whatever is left creates a potential mechanical pool. But first, that pool is measured against a pool created by multiplying 33 cents per qualified subscriber for a bundled tier. This pool is considered the rate floor, and whichever is larger becomes the mechanical payment.

What’s significant about this is that in 2023, before Spotify unilaterally turned paid music subscriptions into bundled pools and it had eight tiers, of which seven were paid tiers, the floor pool never became the mechanical pool. But in 2025, there were 20 tiers: 19 paid tiers and one-ad-supported tier. This means that over three months, in the 57 times that the final step of the mechanical formula was performed for all of the paid tiers, the floor pool determined the mechanical payment in 26 instances. While most of those instances involved paid tiers with small amounts of revenue, they did include the second- and third-largest paid tiers — respectively, the bundled Family Audiobooks tier and the bundled Duo Audiobooks tier. 

While Spotify declined to comment for this story, in the past it has pointed out that its global payments to publishers grow every year.