DID SPOTIFY BLINK
ON FREEMIUM?

Did Spotify just blink on its policy regarding unlimited free streaming? The buzz across the biz is that the streaming giant may be reconsidering its hardline stance on the freemium tier on which their business was built. Highly placed sources say rights holders are meeting with Team Spotify for a come-to-Jesus discussion about their business model going forward.

Pressure from artists, notably superstars such as Taylor Swift, Adele and Coldplay, is clearly coming to bear on the House of Ek, which has hitherto stood by its unlimited-free model steadfastly. Spotify has pursued litigation, accused the labels of collusion, and attempted to mobilize its users against the big bad labels. Rights holders, meanwhile, face a conundrum—they’ve been collecting fat checks from Spotify, but paid based on marketshare. When mega-artists don’t play, the breakdown by marketshare is affected, sometimes radically.

The ratio of free to paid users depends on territory, but is said to vary between 50-50 and 3-1. According to rights holders, more than half of all streams are coming from paid users. Still, they’re frustrated that Spotify has done little to incentivize users of the free platform to migrate to paid. They could have done this in a number of ways, including letting artists choose which tiers would offer music, having paid-only windows for new releases, or capping the number of free streams available before a subscription must be purchased.

That said, the paid model still has difficulty scaling in a world full of free alternatives. Stay tuned.