Finally relenting to pressure from recording companies, Spotify has relented and will put some newly released albums behind the company’s paid tier paywall, in an effort to negotiate improved royalty rates with major labels.
Spotify has announced that it’s struck a deal with Universal Music Group to pay less per stream and that new releases will be placed behind Spotify Premium’s paywall for a period of time of up to two weeks, according to a report stemming from The Verge.
Techcrunch reported in early February that Spotify is aiming to renegotiate its licensing deals in preparation for an eventual IPO in 2018. It’s likely that while the deal only includes artists signed to Universal Music Group currently, other music publishers will soon seek out similar contracts with Spotify.
This move will frustrate Spotify free tier listeners, but it makes sense for the platform to be forced to make some concessions surrounding user experience in an effort to secure its long-term financial health.
Spotify is one of the few remaining streaming music services that still offers a free on-demand tier. In some ways today’s announcement marks the first time the platform — which now has a 50 million plus users worldwide — has shown its growing influence in the industry, leveraging an often-requested shift the service has been reluctant to make, in an effort to negotiate better royalty rates.
While Spotify has a multi-year lead on Apple in the music streaming industry, Apple Music has amassed 20 million subscribers since its launch back in June 2015.
Source: Spotify
Via: The Verge, Techcrunch
