The big music labels would like Spotify to cut back on its free service, which offers on-demand music to 60 million users.
Music Labels to Spotify: Cut Back on Free. Spotify to Users: Here’s More Free Stuff!
Videos -- but not music videos -- podcasts and more. This may please Spotify users, and rankle the music labels.
Michael Loccisano / Getty Images for Spotify
Peter Kafka covered media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.
Spotify’s response: It is loading up its free service with video clips and other goodies, to make its service even more attractive to users who don’t pay.
Spotify CEO Daniel Ek says the new features are a “massive leap forward for Spotify,” and users in the U.S., U.K., Germany and Sweden should be able to judge for themselves in the near future, as new versions of its app roll out.
The biggest change is that Spotify, which until now has only streamed music, is going to start showing users short clips from a wide range of video makers — everyone from Disney’s ESPN to Comedy Central to Vice Media will bring samples of their stuff. (The one thing Spotify users won’t see, for now, will be music videos, since those are generally owned by the music labels. And the labels aren’t pleased with Spotify right now. See below.)
Other tweaks include the addition of podcasts, a more prominent selection of preset playlists and software that’s supposed to create a playlist that will keep pace with your running tempo.
Onstage today at a press event in Manhattan, Ek stressed that Spotify was still fundamentally a music company; videos, he suggested, are just a way to kill time when you’re not listening to your favorite songs.
Still, Spotify has been telling investors about its video ambitions for years, for obvious reasons: When investors imagine digital platforms cutting into the not-yet-disrupted TV business, they get really excited. See: YouTube, Facebook, Snapchat, et al.
Meanwhile, Spotify’s primary feature, which is the one that has distinguished it from every other music subscription service, remains unchanged — it lets people listen to nearly any song they want, whenever they want to hear it, for free.
That’s also the feature that the music labels — along with some high-profile musicians like Taylor Swift — want to change. They want Spotify to cut back on free streams, because they think the service, which says it has 15 million paid subscribers, isn’t adding to that number fast enough and isn’t making enough money from its free streams.
If you’re Spotify, you might argue that making the free service even more attractive is good for the labels: It can give Spotify a chance to make more money from its free users — “video content” = “chance to show people video ads, which are much more lucrative than audio ads.” And it could help bring in more new users, which also gives Spotify the chance to convert some of them into paying users. Both of those scenarios generate more money for the labels, which get a cut of Spotify’s free and paid revenue streams.
But I doubt that argument will mollify the labels, which are now convinced that they are losing revenue to the free music available on Spotify (as well as YouTube, whom they are also gunning for). Which means we may not have seen the biggest change to Spotify’s service yet.
This article originally appeared on Recode.net.
