Spotify’s deadlock with some of the largest music labels could be coming to an end. According to the Financial Times, the streaming giant has agreed to ‘window’ important album releases. This would mean that only paid members would be able to listen to select records on release, further incentivising subscriptions and therefore the revenue that would trickle through to the label companies. According to Engadet, nothing has been signed just yet, but since the concession was made, talks have picked up considerably.
Keeping Labels And Listeners Happy
Spotify is yet to reach profitability. It’s biggest contracts with Universal, Sony and Warner, which collectively make up the bulk of its library, have started to demand higher rates from Spotify as it has grown and holds a bigger role in the industry. However accepting such rates would further threaten Spotify’s business model. However, putting Spotify’s profitability to one side, the company now has 50 million paying subscribers showing it can convert free users and fend off trailing competitors like Apple Music, Tidal and Google Play Music. This bodes well for the future but they can’t afford to lose the support of major labels.
Spotify currently hosts the largest music library globally and incentivises users to pay for a subscription by removing adverts. It also prods free users towards the premium sign-up by limiting their ability to select which song they want to listen to and limiting the number of songs that can be ‘skipped’. Adding yet another limitation to the free user experience clearly risks sending these users to one of their ready-and-waiting competitors. Musicians and record labels, on the other hand, will be appeased by the move.
A New Player In The Podcast Game?
In other news, Spotify is simultaneously trying to push into a different market, as they begin to experiment with podcasts recently. Recently they teamed up with The New York Times to offer a newspaper and music streaming bundle. They also unveiled three original podcasts and brought a couple of WNYC shows to their platform.
Ultimately, though, these are all side-servings. The driving force behind subscriptions is still music, and how the company is able to leverage long-form playlists such as discover weekly. Nailing the contracts with Universal, Sony, and Warner remains a top priority.