Financial Times: Spotify may restrict free streaming in new deal
Quote:
Spotify is considering changing its tune on unfettered access to free music for users of its streaming service, as a concession to record labels in a tough new round of licensing negotiations.
In exchange for restricting some new albums to only paying subscribers for an initial “windowing” period, it is hoping for a substantial cut in the royalties it pays to music rights holders.
However, persuading labels and publishers to accept less than the 70 per cent of its streaming revenues it currently hands over could be difficult, given that rights holders already receive around 73 per cent of revenues generated by Spotify’s main rival, Apple Music.
Windowing “could be perceived as a concession, but in a sense, [Spotify] really doesn’t have a choice”, said one label executive. Spotify’s licensing contracts are up for negotiation with Universal, Sony and Warner, on whom it depends for the majority of its 30m songs.
Spotify has hinted at warming to the concept of windowing, with reports in June that it considered restricting Radiohead’s latest album launch to its paid tier. The New York Post reported last week that Spotify was considering windowing.
In the first 6 months of 2016 'Paid-Subscription Streaming' revenue has increased 111.7% to year-on-year to over $1 Billion USD, whereas 'Ad-Supported Streaming' has only increased 23% to $194 Million USD.
Clearly free tiers aren't necessary anymore, paid subscriptions are taking off by themselves. Time to abolish ha!
The free-tier did exactly what it was suppose to, promote streaming - it became widely adopted among young people are now is being quickly adopted by people with jobs, money. The revenue from these paid-subscribers will crush the need for a free-tier.