Spotify moving towards Premium-only music content amid label pressure, sources say
Although it should continue to provide a free, ad-supported tier, Spotify is reportedly planning to limit some of its music content to Premium subscribers in reaction to pressure from record labels.
Some songs or albums may only be available to paying Premium users, whether permanently or temporarily, sources explained to Digital Music News. The exact set of restrictions has yet to be settled, but a free listener might only be able to hear a popular album for a limited amount of time, or listen to just one or two songs from it. One or multiple variations of these concepts could be put into play.
The transition will likely happen in early 2016, the people said. This would not only give Spotify the time to cement licensing deals but produce updated Web, desktop, and mobile apps.
The sources claimed that the company is responding to pressure from the three largest music labels — Sony, Warner, and Universal — ahead of an October 1 renewal deadline. The CEOs of Sony and Universal in particular have vocally opposed ad-based tiers, since they're thought to devalue catalogs, and typically generate less revenue.
Free listening has long been one of Spotify's main selling points. The company's CEO, Daniel Ek, "hates" the idea of restricting content, according to one source, but could be forced to compromise.
The European Commission recently cleared Apple of colluding with labels against free services like Spotify's, but both that organization and U.S. Federal Trade Commission are still concerned that iOS App Store policies may be stifling competition. Apple claims a 30 percent cut from App Store transactions, forcing companies like Spotify to either charge more in-app, take a severe financial hit, or somehow encourage Web-based sign-ups. Apple Music is included by default in iOS 8.4 and has no revenue-sharing obstacles.
Apple has moreover made exclusives a draw for its service, using artists like Dr. Dre and Taylor Swift to encourage sign-ups. The company so far has 11 million subscribers, though it's unknown how many will stick around once their three-month free trial period is finished at the end of September.