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Universal Music Group pressures Spotify to scale back free streaming

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Guevara

Member
The “freemium” model used by Spotify to amass 60m users and 15m paying subscribers around the world is facing a new challenge just months after the pop star Taylor Swift yanked her albums from the music streaming service.

The Shake It Off singer mounted a high-profile publicity campaign against Spotify at the end of 2014, claiming the service was undervaluing her music by allowing people to listen to it free of charge. Now, Universal Music Group, the world’s largest music company and home to acts ranging from Sam Smith to Katy Perry, is using licence negotiations with Spotify to push for changes to the company’s free service, privately arguing that it is not sufficiently distinct from the its paid-subscription tier.

...

A person close to Universal says there was clear evidence the availability of free music on Spotify was hurting digital downloads from stores such as Apple’s iTunes. “The market data really speaks for itself,” the person says. “It’s clear that the key to success for artists, consumers and Spotify alike is developing an offering that drives more free users to the paid tier.”

Spotify has resisted tightening or changing the free aspect of its service: it says doing so would slow the conversion of free users to paying subscribers and likely send those users to pirated music or free sites such as YouTube. “Without free, pay has never succeeded,” Jonathan Forster, who heads the Nordics region for Spotify, tells the Financial Times. “We’re one of the greenest shoots of growth in the industry. We don’t want to destabilise that. We think that this model works.”
http://www.ft.com/intl/cms/s/0/5645cf6c-ce73-11e4-900c-00144feab7de.html#axzz3VDqO6OQ5

"We need to accelerate the growth of paying subscribers — that's a slightly more positive way of saying we need to limit free," says a source at a major label. "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."
http://www.rollingstone.com/music/news/major-labels-question-free-model-20150320#ixzz3V2w4nhlp

Labels really don't like this "free" business.
 

axisofweevils

Holy crap! Today's real megaton is that more than two people can have the same first name.
It is because of Spotify that illegal activity like torrenting has decreased so much.
 

War Peaceman

You're a big guy.
I mean, it makes sense for these big corporations to push for better terms. That is exactly what I would expect them to do in negotiations.

However, they should seriously look at how they utilise Spotify/its rivals to maximise other avenues of earning money. Be it through merchandise or shows, these streaming services can provide excellent marketing for their artists whilst also earning a little bit of money. Music is no longer about the sale of the music, but the corollary aspects.

I really hope the streaming services don't back down and keep free services strong. But concurrently, Spotify does need to better differentiate its premium service. Ideally through more and better features.
 
Genie is out of the bottle. The labels did this to themselves.

This is what I don't understand, didn't they have to sign contracts and shit with Spotify? Now they want to change things so they get more money I guess. The music industry is such horseshit.
 
This is the same shit starz network was and did to Netflix a few years back, these fucking licensers always get greedy after someone else lays the ground work.

They wanted Netflix to increase the price of membership to $10+ or they'd take there content and leave, a lot of Disney content was part of the deal. Netflix didn't agree so Starz took their ball and went home and now Netflix is still doing good and they actually have a contract through Disney themselves and they don't have all that lame ass Sd starz content lol
 

JMDSO

Unconfirmed Member
This is what I don't understand, didn't they have to sign contracts and shit with Spotify? Now they want to change things so they get more money I guess. The music industry is such horseshit.

This is why your Netflix library is (at times) subpar.
 
It's funny because you know even if Spotify did listen to the major labels and scaled back on free streaming, the labels wouldn't increase payouts to their artists. They would just make more money and as usual continue to pay the talent next to nothing.
 

Sheroking

Member
Tough shit, Universal.

We're in the consumerist age. You get consumers by plying them with value, you lose them by taking value away.

But by all means, kill Spotify and chase consumers to the Pirate Bay.
 

Guevara

Member
Ha, yeah. Take away Spotify and people will just return to the iTunes store in droves right? Fuck off with that.

What's funniest about this line of thought, is that even Apple recognizes people aren't coming back to iTunes. That's why they bought Beats, and why they're launching their own streaming service later this year.
 

linsivvi

Member
Google Music to reign supreme.

There is no free option for Google Music, is there?

Google Music allows people to upload all their pirated music for free streaming.

And that's exactly what restricting Spotify and other free streaming services would do.

Music executives still haven't learned. Greed has blinded them.
 

J10

Banned
This is what happens when you put MBA's in charge of a creative industry. They're determined to stay ten years behind every technological advance. They didn't think to invent Napster, the iPod, or Youtube. They left the real innovation to actual geniuses while they struggled to control the consumption of products via lawsuits, and wallow in outdated business practices instead of getting in on the ground floor where the innovation was happening and adapt. And when the lawsuits don't work, they cut the jobs of actual creative people instead of putting forward thinking creatives in charge.

Similarly, why isn't there a Kodak or Polaroid branding on Instagram, Vine, or Snapchat? I wonder.
 
if Universal gets their way....spotify it was a good run....

Spotify already had a good run when they "updated" the desktop app. God damn what were they thinking? Spotify's major advantage over other services on PC (desktop app versus browser app) is now gone.

Their only draw now is being free, and if that goes away Google or Apple will win.
 

Goldrush

Member
Spotify must have some voodoo negotiators to have free streaming going for so long. There are so many streaming alternatives available now, I'm have no clue what leverage Spotify actually have.
 

Sean

Banned
IMO the business model for streaming music just isn't there yet.

At least on the TV and movie side of things the studios get big bucks from all the exclusivity deals that Netflix/Hulu/Amazon sign. Netflix is paying a whopping $2m per episode for NBC's The Blacklist for example (that's $44 million for just one season of one show). For comparison, Taylor Swift reportedly earned only $2 million from Spotify all of last year and she's perhaps the biggest artist out there.

I know the music industry is greedy as fuck, but there's some legitimacy to their complaints imo.
 

Loofy

Member
I dont use spotify but reading the OP it seems people are listening to music.. for free? and people are complaining that artists shouldnt be complaining?
 

kiguel182

Member
Spotify is growing and attracting more paying users than pretty much any other service and they want to mess with that. As if there wasn't already a way to get music for free that nets them zero money. They really don't learn.
 

Chris R

Member
I liked the three month demo of Premium for $0.99 Spotify ran from the end of last year until the end of this month.

Not enough to spend $10 a month on Premium though. I'd probably bite at $4.99 since I'm listening to maybe 10 hours of music a month through it.
 

cdyhybrid

Member
I dont use spotify but reading the OP it seems people are listening to music.. for free? and people are complaining that artists shouldnt be complaining?

It's not free, you have limited functionality and get commercials.

Record companies have to be dragged kicking and screaming into the 21st century.
 

Bleepey

Member
IMO the business model for streaming music just isn't there yet.

At least on the TV and movie side of things the studios get big bucks from all the exclusivity deals that Netflix/Hulu/Amazon sign. Netflix is paying a whopping $2m per episode for NBC's The Blacklist for example (that's $44 million for just one season of one show). For comparison, Taylor Swift reportedly earned only $2 million from Spotify all of last year and she's perhaps the biggest artist out there.

I know the music industry is greedy as fuck, but there's some legitimacy to their complaints imo.

Is the $44 supposed to be shocking? That's not even 1 season of 13 episode Daredevil!
 

linsivvi

Member
IMO the business model for streaming music just isn't there yet.

At least on the TV and movie side of things the studios get big bucks from all the exclusivity deals that Netflix/Hulu/Amazon sign. Netflix is paying a whopping $2m per episode for NBC's The Blacklist for example (that's $44 million for just one season of one show). For comparison, Taylor Swift reportedly earned only $2 million from Spotify all of last year and she's perhaps the biggest artist out there.

I know the music industry is greedy as fuck, but there's some legitimacy to their complaints imo.

She made more than $300K from just one song last October alone.

TV shows and movies also cost a hell lot more to make, and require hiring hundreds of people.
 

Antagon

Member
IMO the business model for streaming music just isn't there yet.

At least on the TV and movie side of things the studios get big bucks from all the exclusivity deals that Netflix/Hulu/Amazon sign. Netflix is paying a whopping $2m per episode for NBC's The Blacklist for example (that's $44 million for just one season of one show). For comparison, Taylor Swift reportedly earned only $2 million from Spotify all of last year and she's perhaps the biggest artist out there.

I know the music industry is greedy as fuck, but there's some legitimacy to their complaints imo.

Spotify pays out tons of money. Over a billion per year nowadays. If Taylor Swift only made two million, that's not because Spotify doesn't pay out enough, but because the deal she has with her recording label is shit.
'
To give you an idea, Kendrick Lamar's 'To pimp a butterfly' made two million in just the first two days on Spotify. Of course, that money is going to go to the studio and he just gets a part of that, but hard to blame the business model don't you think?
 

paparazzo

Member
Sounds reasonable. I've seen plenty of entitled people try to argue that music should be free, and having a free, on-demand service with entire artist libraries only re-enforces that idea. It should be a paid-only service ala Netflix.

If people are going to pirate, they weren't paying for the music in the first place. At least this way, there's a better chance they'll grow up and learn to pay for things.
 

Somnid

Member
The music industry's constant resistance to get their stuff together has lead to this situation. They really are at unsustainable levels though, Spotify isn't making money and the money it does make is growing because of subs, not ads. This has to happen either way because eventually streaming will be considered mature and investors will stop holding it up unless it can swim by itself.
 
I liked the three month demo of Premium for $0.99 Spotify ran from the end of last year until the end of this month.

Not enough to spend $10 a month on Premium though. I'd probably bite at $4.99 since I'm listening to maybe 10 hours of music a month through it.

Are you a student? If you have an .edu email you can get it for $5/mo.
 

Palocca

Member
Spotify pays out tons of money. Over a billion per year nowadays. If Taylor Swift only made two million, that's not because Spotify doesn't pay out enough, but because the deal she has with her recording label is shit.
'
To give you an idea, Kendrick Lamar's 'To pimp a butterfly' made two million in just the first two days on Spotify. Of course, that money is going to go to the studio and he just gets a part of that, but hard to blame the business model don't you think?

Yup, the current market has evolved much more than when Taylor Swift first had her music available. The music industry "invested" in Spotify by undervaluing their content because they saw potential growth in the market. Now that it's becoming fully realized, the industry is going to look for their big cash payout in their next contract negotiations.

I foresee Spotify going through the same growing pains as Netflix did when their VOD service first expanded into the powerhouse it is today.
 
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