Spotify is a music streaming platform that grew famous for its freemium model. It allowed users to listen to their favourite artists’ songs without blatantly ripping them off by resorting to privacy. However, that freemium model, which Spotify has staunchly defended in the past, has suffered a huge blow in favour of Spotify Premium.
Spotify has just announced that it signed a multi-year deal with Universal Music Group, the biggest record label in the world, that would essentially snub users who opt for the free version of Spotify. The deal will allow artists signed to UMG to choose to release new albums to Spotify Premium two weeks before they become available for streaming on the free version of Spotify. Singles, however, will be available across Spotify, regardless if you’re a Premium subscriber or not.
“This partnership is built on a mutual love of music, creating value for artists and delivering for fans. We will be working together to help break new artists and connect new and established artists with a broadening universe of fans in ways that will wow them both. We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy. Starting today, Universal artists can choose to release new albums on premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy. I want to thank Sir Lucian for his leadership in everything we have done so far and in everything that we will do together to deliver on the promise of the new music economy for all the people who make music and all the people who love it.”
– Daniel Ek, Chairman and CEO of Spotify.
While this will no doubt create a surge of users subscribing to Spotify Premium, it will also increase piracy. A similar trend was seen when Kanye West dropped an exclusive album on Tidal, a subscription-only music streaming service, there was an increase of Tidal subscribers while there was also a noticeable uptick of illegal downloads of the album.
According to a Spotify financial filling in 2015, advertisements targeted at freemium users generated a revenue of $0.22 billion while $1.96 billion in subscriptions for Spotify Premium made the bulk of its revenue. The new deal with UMG is sure to bolster the company’s financial holdings ahead of its expected IPO.
Source: Spotify
