Major music companies hate free music, so Spotify might no longer offer it



Spotify is feeling heat from the big 3 labels in music, those being Sony, Warner and and Universal. According to new reports, the companies are apparently pressuring Spotify to improve their revenue model in order to increase the royalties they and their artists receive.

It’s said that Spotify’s deals only award royalties from paid subscriptions, but the free userbase — which consists of around 60% of the 75 million people who use the service — generates next to nothing. The record companies and artists feel that yanking away free options would naturally lead to an increased number of people who would pay for on-demand access.

And they’re not wrong. Most people will take free whenever, wherever and however they can get it, even if it means their level of access isn’t quite as deep as those who pay out of pocket. They’ll watch and listen to ads with no issue, because even though they can’t think of their favorite song and play it in an instant they’ll be more than happy listening to something similar. There’s also YouTube for those desperate times where you just HAVE to hear a certain song.

Some might say we have Apple to blame, but that’s not entirely true. Apple backed down on their original plans to hold back royalties during the 3-month Apple Music trial, and their royalty rates of 71% are about on-par with the rest of the industry. They also have a free component (albeit not as sweet), so it’s not as if Spotify is the only company making these labels uncomfortable.

Apple Beats Acquisition

For what it’s worth, there’s a possibility Spotify won’t completely obliterate their free tier. Instead, they’d hold back premium content and only look to offer it to those willing to pay. Suddenly, you won’t be able to play “Taylor Swift Radio” and have her latest tunes popping up here and there. That in itself could be a big deal, and might be enough incentive to get those folks onto paid plans in the future.

Whatever the case may be, the fact that we’re already due for yet another major shift in the music streaming business means competition is healthy and both sides of the table are beginning to understand what, exactly, they want. Whether that understanding will translate into more palatable agreements and compromises down the line remains to be determined.

Quentyn Kennemer
The "Google Phone" sounded too awesome to pass up, so I bought a G1. The rest is history. And yes, I know my name isn't Wilson.

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