Updated: Spotify has reached out to 9to5Mac, refuting the original report. Spotify’s Director of Communications, Graham James, informed 9to5Mac that “This is totally false. Our model is working.”
Currently, you can get free, ad-supported access to Spotify’s music service for an unlimited length of time, but that might soon become a thing of the past. According to a report from Digital Music News, multiple sources have indicated that Spotify’s free tier may become a three-month trial period instead. If true, this shift will make both Apple and most of the major record labels very happy.
Universal Music Group and Sony Music Entertainment are said to be the main drivers behind the proposal for a time-limited free trial of Spotify’s streaming service. Current free-access subscribers would be able to continue their plans for six months, but new users would be limited to a three month trial period.
Spotify is less than pleased by this proposal, insisting that its free to premium migration path is working just fine. Major label decision-makers, though, are not so sure. Spotify has 15 million paying subscribers, but the labels are still not happy with the revenues they are seeing from their agreements with the company. Unfortunately, Spotify has little, if any, power to negotiate. After all, without cooperative licensing from the three major labels, Spotify would become a crippled non-player in the streaming music business.
Merlin, a consortium of leading independent labels, seems less than enthused about the insistence from Universal Music Group and Sony Music Entertainment to curtail the free music plan. Charles Caldas, CEO of Merlin Network, voiced his thoughts on the move.
Treating consumers like children and telling them that everything they’ve enjoyed about these streaming services is going to be taken away because the biggest record companies don’t like it, that’s another Napster moment. The major labels screwed Napster and screwed the market by killing what was potentially the biggest opportunity the industry could imagine in getting into the digital space early. If they follow through with this, they are going to do it again.
Of course, Apple would be thrilled to see Spotify end its free music tier, and see the change as winning a major battle. Cupertino has reportedly been pushing major music labels to force services like Spotify and YouTube to abandon their free tiers. Apple is expected to unveil its revamped Beats Music service, purportedly named “Apple Music,” at WWDC in June. Apple Music would compete directly with Spotify Premium, Rdio Unlimited, and other paid services, but would not offer a free music tier outside of a trial period.