Spotify facing pressure from Sony, Universal to drop free on-demand music - report
Major record labels Universal Music Group and Sony Music Entertainment are both reportedly proposing that Spotify end its free, ad-supported on-demand music in a bid to push people into paid subscriptions.
Sources told Digital Music News that under the labels' specific proposal, current free listeners would keep on-demand access for six months, while anyone new would be limited to a three-month trial.
Some artists and labels would be able to make their songs free past that point, but only at request, and participating artists would be grouped into "emerging" or "up-and-coming" playlists — an idea that has also been rumored for Apple's upcoming rebrand of Beats Music. Non-interactive radio streams would remain free regardless.
Spotify has allegedly balked at the idea of ending the ad-supported tier, arguing that it's already succeeding at converting people to paid plans. One of the sources commented however that Sony and Universal "aren't really asking as much as they're telling." That may mean that if Spotify doesn't bend to the labels' demands, it could lose the music licenses it needs to run.
Another source claimed that Warner Music Group is aware of the talks, but not fully convinced of the proposal, mainly because some Spotify users might simply turn to piracy or YouTube rather than pay.
Recent reports have suggested that the record labels' actions may have been influenced by Apple, which is looking to gain a competitive edge for its new music service. The company is in fact thought to be facing inquiries by both the Federal Trade Commission and the Department of Justice regarding its negotiating tactics. If Spotify were to drop free on-demand listening, that might make an equivalent paid Apple service more attractive.
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