Report: Spotify Set To Limit Freemium To Three Months?
May 15, 2015 at 1:13 PM (PT)
A report in DIGITAL MUSIC NEWS today suggests that SPOTIFY, responding to major label blowback, is considering cutting its freemium model to a three-month window.
The proposal, advanced by UNIVERSAL MUSIC GROUP and SONY MUSIC ENTERTAINMENT in talks with the DANIEL EK-helmed streaming service, would allow current, free-access, ad-supported subscribers to continue their plans for six months, while new users would be limited
SPOTIFY remains determined to its freemium model, claiming that the switch to premium for users is effective, though its 15 million paying customers hasn't impressed the likes of UMG's LUCIAN GRAINGE or SONY's DOUG MORRIS. If those two companies pulled their content, SPOTIFY would be in trouble, despite its massive cash advances and equity stakes up to 15% to lure major label licenses.
The plan would also allow a number of artists and labels to extend past three months, if they so choose, grouping them into "emerging" or "up-and-coming" playlists, similar to an idea being considered by APPLE for its yet-to-be-introduced streaming service.
WARNER MUSIC GROUP remains on the sidelines in the debate, pointing to the piracy issue. WMG CEO STEPHEN COOPER commented at a recent investor 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.
“So I think that before people conclude that freemium should be burnt at the stake, we should think very carefully about the consequences.”
MERLIN, the consortium of leading independent labels, is also opposed to the idea.
“Treating consumers like children and telling them that everything they’ve enjoyed about these streaming services is going to be taken away because the biggest record companies don’t like it, that’s another NAPSTER moment,” commented MERLIN NETWORK CEO CHARLES CALDAS. “The major labels screwed NAPSTER and screwed the market by killing what was potentially the biggest opportunity the industry could imagine in getting into the digital space early. If they follow through with this, they are going to do it again.”