Inside sources have revealed that Spotify may be eliminating their free service early in 2016 due to pressure from major labels: Universal, Warner, and Sony. This may result in a subscription-only model.
This ‘gated’ or ‘premium-only’ system may unravel in a variety of scenarios. One of which could be to restrict the number of songs available to free users. Simply put, nonpaying users would be limited to listening to only a track or two from an album. However, paying subscribers would have instant access to the complete album. Another option would be to entirely eliminate access to free users and switch the entire service to a pay-to-use platform. Regardless, one source told Digital Music News that Spotify’s ultimate goals are:
(a) encouraging greater adoption of the paid, premium tier; and
(b) driving more revenue around the most sought-after superstars.
The three major labels have yet to renew their licenses with Spotify, which enables the company to host their artists’ music, despite the renewal date approaching in less than two months (October 1st). Companies make no money without a paid subscription service, which is likely the cause for the pressure. As more and more free users latch onto the site, with no intention of upgrading their accounts to the paid model, it becomes more of a focus for such organizations to take steps toward maintaining a profit.
Furthermore, Ken Parks has recently fled his position at Spotify in place of a television startup company. As Digital Music News describes, “highly-ranked executives typically don’t jump ship right before getting disgustingly rich.” This may be yet another indicator of Spotify’s current stalemate with the major labels.
In the past, Spotify has remained rigid against numerous pushes to move toward a paid model. From internal conflicts with CEO Lucian Grainge, to public outcries from celebrities Taylor Swift, Adele, and more, the service has refused to limit itself. As the label renewal date approaches however, it seems that they may finally break their streak and impose restrictions on their free service. Abandonment from the major labels that have kept their service afloat would be detrimental to Spotify. Sadly, it seems that they have very little control over their future, whatever that may entail.