In recent years, streaming has revolutionized the way music is enjoyed and monetized, but not without unexpected consequences for those who create it. The aggressive adoption of bundling—that is, the inclusion of music in packages that also offer audiobooks, podcasts, or other digital services—is reshaping the economic balance of the entire industry. Understanding how this practice works and what impact it has on royalties is essential for both large publishers and, above all, for independent artists who rely almost exclusively on platform revenue.
In this article, we will clearly analyze what bundling is, why it reduces the revenue of songwriters and publishers, what figures are already at stake, and what could happen with the upcoming Phonocords V negotiations. We will conclude with some practical reflections and a call to action, because understanding the problem is only the first step towards solving it.
1. What is bundling?
Bundling refers to the commercial practice of selling multiple digital products in a single subscription: for example, streaming music + audiobooks + podcasts. The user pays a single monthly price and gains access to all the included services. From the platforms' point of view, bundling allows them to:
- Increase ARPU (average revenue per user) without appearing like a simple price increase.
- Reduce churn: those who use more services are less likely to abandon their subscription.
- Spread the licensing costs (higher on music) over items that cost less or are entirely proprietary.
2. Why bundling reduces music royalties
US law (Section 115 of the Copyright Act) requires that, when a service is sold in a bundle, an allocation formula be applied:
Music share = hypothetical price of the music service alone ÷ sum of the hypothetical prices of all parts of the package
Only the resulting share is considered “ricavo musicale” on which to calculate the mechanical royalties (15.35% with the Phonorecords IV agreement). This is why it happens that:
▸ SELF-CONTAINED RESPONSIVE TABLE ◂
| Scenario | Price paid by the user | Revenue attributed to music | Royalty (15.35%) |
|---|---|---|---|
| Music-only subscription | 10 $ | 10 $ | 1,535 $ |
| Music + audiobook bundle | 15 $ | 7,50 $ (50 %) | 1,151 $ |
▸ END OF TABLE ◂
The user spends more, but the authors get less. The rest of the cash flow is classified as “servizio non musicale” and is not subject to the same royalties.
3. The economic impact so far
- $230 million in revenue lost to songwriters and publishers in the first year of the Spotify bundle (NMPA estimate, June 2025).
- Projected $3.1 billion in lost revenue by 2032 if the practice is not corrected.
- Amazon Music adopted a similar bundle in November 2024, causing a 40% drop in the music share paid to rightsholders in the following three months.
If Apple Music or YouTube Music were to imitate the model, the damage would multiply and could become structural.
4. From Phonorecords IV to Phonorecords V: What's at Stake (2028-2032)
Phonorecords IV (2023-2027) raised the mechanical royalty rate to 15.35%, but did not set a floor for the share of music in bundles. The negotiations for Phonorecords V, which will determine royalties from 2028 to 2032, will be crucial for:
- Guarantee a minimum share of music revenue in bundles.
- Limit the use of mandatory licensing when a service changes the nature of its offering.
- Introduce automatic corrections and penalties for underestimating the music component.
5. Why independent artists are the most exposed
Major labels can compensate for cuts with merchandising, synchronizations, and catalog advances; an indie artist, on the other hand, depends primarily on mechanical royalties. If these dwindle, the liquidity needed to produce and promote new music diminishes. In extreme scenarios, bundling can turn into a career-ending sentence for those with no other income.
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For years, I have been managing editorial management and digital distribution for independent artists and labels, negotiating fairer conditions, optimizing metadata, and leveraging alternative monetization channels.
If you want to protect the value of your music and increase your streaming revenue, book a free meeting with me: we'll analyze your catalog and identify the most effective levers to grow your revenue.
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Bundling doesn't have to be a trap: with the right strategy, it can become an opportunity, as long as you know how to assert your rights.
