After Taylor Swift, it is now the turn of Universal Records to take a swipe at Spotify’s hugely successful business movel. Spotify, and other music streaming services like Rdio and Pandora, have buoyed a long-declining market with the support of eager music labels, but it seems those very same labels are starting to get nervous about their revenue streams.
According to the Financial Times, Universal Music Group, the world’s largest music company and home to acts such as Sam Smith and Katy Perry, is now leveraging current contract negotiations with Spotify to push for more limitations on the free service to encourage users upgrade to a paid subscription. The paid model costs $10 in the US, which is where the majority of Spotify’s users reside. “Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors,” said company CEO Lucian Grainge recently.
Currently, Spotify offers unlimited on-demand streaming on computers, but limits mobile devices to a randomized, more Pandora-like service. Paid subscribers hear no ads and get access to things like higher-quality streams and offline access.
Universal isn’t the only label having second thoughts, according to Rolling Stone. “We need to accelerate the growth of paying subscribers — that’s a slightly more positive way of saying we need to limit free,” said one of the sources quoted in the article. “You can make the subscription service more attractive, with high-resolution sound or exclusive albums, or you can make the free version worse, by limiting the amount of stuff you can listen to.”
Last fall, Taylor Swift shut out music-streaming services like Spotify from the release of her latest album, 1989. However, what the music labels aren’t seeing, or are unwilling to accept, is that Swift is one of the very few remaining musicians who have a big enough fanbase that they can still generate healthy physical album sales in an age when most music has moved online.