Rumours Spotify is planning to cut its free streaming service to three months are lies, that’s according to a spokesperson for the streaming service speaking to Music Business Worldwide.
In a blunt statement, Spotify said “It’s totally false. The model is working.” The comment should be an end to the discussion, but MBW say their sources are correct and Spotify is keeping it under wraps until the new streaming cuts are unveiled.
Universal and Sony are reportedly pushing Spotify to make this change, following several high profile artists moving away from the music streaming service. Taylor Swift has been the most vocal, claiming Spotify does not evenly distribute the money made to artists.
Warner might also be pushing Spotify to cut the freemium model, after CEO Stephen Cooper recently said the music industry should “burn the model at the stake.”
Spotify claims the freemium model is working and given enough time may surpass the paid model, thanks to better advertising deals. It managed a 380 per cent increase in advertising profit throughout 2014 (opens in new tab), a great statistic to keep the labels happy. Spotify also plans video advertising to match YouTube's massive growth (opens in new tab).
That said, with Tidal already available and Beats Music relaunch happening next month, it might be hard times for Spotify (opens in new tab) when it comes to negotiating contract deals, unless it plans on losing more profit in order to pay the music labels more per listen.
Spotify may announce some of the changes within the next four weeks, followed by further changes to the music streaming platform in the later half of 2015. If it does do this, it might lose the confidence of the 45 million free users, although if music labels had their way this would be a small price to pay for a few million more paid users.
Source: MBW (opens in new tab)