Spotify will restrict some albums to its paid tier
Spotify will soon concede on one of its most controversial policies — that all music on its platform be available to both free and paid users. As it works to renegotiate its now expired licensing deals with music labels, Spotify has agreed to restrict some new releases to its premium tier, The Verge has learned.
The deal may be months away from being finalized, but Spotify is said to have cleared this particular clause with major record labels. The news of the company’s ongoing negotiations was first reported earlier today by the Financial Times, which said that Spotify will receive a reduction in royalty fees it pays to record labels, part of a bid to make its business more attractive ahead of an initial public offering.
The Swedish streaming service has long been dogged by big-name artists, and their record labels, who would rather sign exclusivity deals with Apple Music or Jay Z’s Tidal. Yet that hasn’t stopped Spotify’s growth. The company boasted 50 million paying subscribers earlier this month, with another 50 million free users who use the service at least once a month. That more than doubles Apple’s most recently reported figure of 20 million subscribers and dwarfs Tidal’s 3 million.
Still, 2016 was the year music went exclusive. Big releases from Rihanna, Drake, Beyoncé, Kayne West, Chance the Rapper, and Frank Ocean arrived first on either Apple Music or Tidal and shook the cultural landscape, while Spotify users were sent scrambling to torrent sites, YouTube streams, and the free trials of competing services.
Spotify has remained pretty steadfast in its opposition to exclusives since a public spat with Taylor Swift led the artist to pull her catalog in 2014. Troy Carter, Spotify’s global head of creator services, said last August that exclusives were “bad for artists, bad for consumers, and bad for the whole industry.” In place of fighting Apple and Tidal for exclusivity on big releases, Spotify has poured more resources into its new creator services division. That group works with artists to market new releases, push ticket sales, and perform the types of promotional pushes — for free — that some firms would charge top dollar for.
It would seem, however, that Spotify is eager to shore up more economic goodwill with potential investors, as well as the “big three” record labels that all have minority stakes in the company and an interest in seeing its IPO do well. While the “freemium” model that Spotify has held onto throughout its existence is far from going away, the gulf between what the company’s free and premium services offer may soon get notably wider. Spotify declined to comment for this story.