Update: We’ve gotten word from a Spotify spokesperson that the Free model isn’t going anywhere. Director of Communications at Spotify Graham James told me “This is totally false. Our model is working.”
Digital Music News is claiming that Spotify is coming under pressure from music labels to end its free, ad-supported service, limiting users to a three-month free trial.
The three-month ‘proposal,’ advanced most principally by major labels Universal Music Group and Sony Music Entertainment, would allow current, free-access, ad-supported (or ‘freemium’) subscribers to continue their plans for 6 months, while new users would be limited to three months only. Coincidentally or not, Universal Music Group is one of the labels specifically mentioned in two investigations into whether Apple is attempting to stifle competition in the run up to launching its own streaming music service …
Citing “multiple [but anonymous] sources,” the report says that Spotify itself doesn’t want to make the change, but has been facing increasing reluctance by labels to continue to support its free tier, having to offer both substantial cash advances and equity stakes to obtain the necessary agreements.
Sony is said to be another label behind the proposal, with one source suggesting that ‘proposal’ may be too gentle a term.
But, in all reality, remember that [Sony Music Entertainment CEO Doug] Morris and [UMG CEO Lucian] Grainge aren’t really asking as much as they’re telling.
Warner is reportedly more cautious, feeling that the relatively small revenue from ad-supported plays is better than the alternative, with CEO Stephen Cooper expressing this view on a recent earnings call.
You know to be crystal clear, piracy is zero revenue, it’s the theft of intellectual property, and it’s not good for anyone. So all of these models are better than piracy, that’s number one.
Smaller labels are also said to be less keen, though the proposal does allow artists to choose to continue to allow free plays beyond the trial period in an ‘up and coming’ category.
With Digital Music News the only source, and none of its own sources named, we’re filing this one under ‘interesting rumor’ for now. We’ve reached out to Spotify for comment and will update should we get a response.
The European Commission last month launched an investigation into allegations that Apple was applying pressure to labels, with the DOJ doing the same earlier this month. Apple is expected to launch its streaming music service at WWDC in June, with a later release date.