A new report claims that Spotify may be adjusting its business model in the near future. While the popular streaming music site currently offers both premium and ad-supported tiers, DigitalMusicNews relays that Spotify may soon be shifting its focus towards its premium business.
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Because customers, on the whole, have grown accustomed to tolerating and ignoring ads, Spotify is reportedly toying with the idea of making certain songs or albums accessible exclusively to paying customers. The end goal here, of course, would be to encourage a greater percentage of users to jump from the ad-free service to a $10/month premium subscription.
One, or several different variations could be rolled out, and sources noted that an ‘early 2016′ transition is the most likely. That would allow renewal contracts to be solidified, and development teams to finalize the application updates. But regardless of the timing and exact execution, the underlying goals of the shift, according to one source, would be:
(a) encouraging greater adoption of the paid, premium tier; and
(b) driving more revenue around the most sought-after superstars.
As it stands today, Spotify currently has approximately 75 million active users, of which about 20 million or so are subscribers.
Though it’s entirely possible that Spotify has long been harboring a more premium-oriented strategy, its just as plausible that Spotify’s plans have been somewhat influenced by what Apple is doing with Apple Music. Apple’s own streaming music service, as a quick refresher, has no ads whatsoever. Instead, the only subscriber option is to pay $10/month for unlimited music. While it remains to be seen how much of a dent Apple Music will make on the music industry, the service, which is admittedly still in trial mode, already boasts over 11 million users.
If any pricing changes are decided upon, the report notes that users can expect to see them in early 2016. Indeed, the report makes a point of noting that Spotify has some big negotiations coming up with record labels.
The decision comes at an extremely high-pressure moment for Spotify, as major label licenses remain unsigned less than two months ahead of renewal. “October 1, that’s your renewal date for all three of the majors,” another source relayed, referring to the ‘Big Three’ of Sony Music Entertainment, Warner Music Group, and most importantly, Universal Music Group.
Though Spotify CEO Daniel Ek reportedly is none too thrilled with the idea of limiting the selection of songs made available to non-paying users, it’s entirely possible that he’ll have to cave to the powers that be once October rolls around.
