Guest Post by Alan Cross on
A Journal Of Music Things
You can pay the full fare (usually $9.99 a month) for a version
of the service that allows maximum control. Or you can opt for
the free (or “freemium” version that doesn’t give you as many
features and forces you to listen to commercials.
Artists and rights holders make money from both,
although the rates for the paid service are
substantially higher than for what they get out of
freemium streams. However, the more people who sign up for the
freemium tier, the bigger the revenue bucket and
(theoretically) will eventually result in larger payouts.
It’s just going to take time for that customer base to
That base is getting larger. Music piracy is way down because
streaming services are easier to use and more convenient than
stealing. Hey, getting paid something is way
better than piracy, which pays nothing. And if they do
it right, the streaming services can convert freemium customers
into paying subscribers.
Record labels hate the idea of the freemium services, saying
that they want it to die. “Everyone should pay!” they
say. That drumbeat is getting louder, too.
Free streaming is being portrayed, by some, as the end
of the music business.
Start with the latest articles to feature anonymous quotes from
label sources, yesterday (Mar. 22)in
the Financial Times (“Streaming sets off
a painful debate in the music industry”) and Friday (Mar.
20) at Rolling
Stone (“‘We Need To Limit Free’: Major Labels
Begin to Question Spotify Model”). A Billboard
article earlier in the month had the same comments
from industry sources; labels have changed their opinions on
unlimited free streaming and have become more vocal about their
desire for subscription services to turn free listeners into
The timing of these articles’ publications
isn’t a coincidence. The Financial Times‘ work
seemed to suggest Spotify is currently in licensing
negotiations and might not renew some contracts. “Now
the record companies have weighed in, led by Vivendi’s
Universal music label, arguing that the company’s free service
is not sufficiently distinct from what customers pay for. They
have real clout: their catalogue licenses are up for
renegotiation and without permission to use them,
Spotify has nothing to sell,” the article
That particular calendar comes to an end this summer, when
Spotify’s deals with major labels are likely to expire in the
United States. Spotify launched in the United States in July of
2011. Whether Spotify and the labels had two-year deals or
four-year deals, the contracts would need to be renewed at that
Ah. Now it makes sense. Keep reading.