Universal Music Group (UMG) wants Spotify to add more limits to its free streaming service, according to reports. The record label is apparently having issues with the freemium music offering and its apparent lack of revenue, and hopes that restricting the number of listens for songs will push Spotify users to the more lucrative paid subscription service.
The Financial Times reports UMG is currently in contract discussions with Spotify, using the negotiations to try and force the streaming service to change its free tier. In theory, by making free Spotify users move to the $10 subscription, this will increase revenues for Spotify, and in turn increase the amount UMG earns in royalty payments.
UMG is not the only record label wanting free users to become paid subscribers, with Rolling Stone reporting that other labels are growing wary of the freemium model. A source of Rolling Stone suggests labels want streaming services to make their subscription services more attractive, such as by offering “high-resolution sound or exclusive albums,” and to make the free version unattractive by limiting the amount of music that can be listened to by users.
The squeeze on free music comes at a time when streaming music services have overtaken CD sales in the United States in terms of revenue. While streaming revenues in 2014 totaled $1.87 billion for the year, it is still dwarfed by paid downloads at $2.85 billion, though this figure itself is down by 8.7 percent over 2013. Overall music industry revenues dropped 0.5 percent year-on-year to just under $7 billion. This streaming revenue figure could receive a further boost this year, with rumors suggesting Apple’s revamp of Beats Music will be surfacing in June.
