Spotify facing pressure from Sony, Universal to drop free on-demand music - report

Posted:
in iPod + iTunes + AppleTV edited May 2015
Major record labels Universal Music Group and Sony Music Entertainment are both reportedly proposing that Spotify end its free, ad-supported on-demand music in a bid to push people into paid subscriptions.




Sources told Digital Music News that under the labels' specific proposal, current free listeners would keep on-demand access for six months, while anyone new would be limited to a three-month trial.

Some artists and labels would be able to make their songs free past that point, but only at request, and participating artists would be grouped into "emerging" or "up-and-coming" playlists -- an idea that has also been rumored for Apple's upcoming rebrand of Beats Music. Non-interactive radio streams would remain free regardless.

Spotify has allegedly balked at the idea of ending the ad-supported tier, arguing that it's already succeeding at converting people to paid plans. One of the sources commented however that Sony and Universal "aren't really asking as much as they're telling." That may mean that if Spotify doesn't bend to the labels' demands, it could lose the music licenses it needs to run.

Another source claimed that Warner Music Group is aware of the talks, but not fully convinced of the proposal, mainly because some Spotify users might simply turn to piracy or YouTube rather than pay.

Recent reports have suggested that the record labels' actions may have been influenced by Apple, which is looking to gain a competitive edge for its new music service. The company is in fact thought to be facing inquiries by both the Federal Trade Commission and the Department of Justice regarding its negotiating tactics. If Spotify were to drop free on-demand listening, that might make an equivalent paid Apple service more attractive.
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Comments

  • Reply 1 of 43
    melgrossmelgross Posts: 31,876member
    It's funny how information such as this poops up, isn't it? Can it really be that the Justice Department wasn't aware of any of this before they began investigating apple?

    And now that they do have this I for, because it's hardly be.ievable that they wouldn't see it now th at its being published, how will this change things? Will they add all of these companies to the investigation, or will they ignore them, and continue on with their investigation of apple?

    More to come, no doubt.
  • Reply 2 of 43
    suddenly newtonsuddenly newton Posts: 13,763member
    Sound like the three-letter agencies need to investigate Sony and Universal as well.
  • Reply 3 of 43
    adrayvenadrayven Posts: 460member
    Meh... Of course their 'saying' Apple 'encouraged' them to do this.. The 'THEY' is Spotify, who is taking any chance they can to try to pull another iBooks.. they don't care if it's true, they just want to bully Apple like they've been bullying the Music Artists lately.

    Seriously.. Labels like Sony had already pushed this idea to Apple the very same thing, so that Sony is pushing this concept to Spotify is not surprising..

    That said, the reason they are pushing Spotify is Apple probably balked at the same idea when the labels pushed it to Apple. Mainly because if Apple was the only ones doing it; this would make Apple's new service a ghost town since users could just goto Spotify for free.

    I no longer use Spotify myself, I stopped after I saw how this was going. Free isn't always good, not if you want it to last.. Spotify's quarterly reports shows that 95% of their income is from paid, NOT ads, but 75% of their usage is from NON-PAID users. Basically, the ad system isn't getting any money and people are just getting the music free and the artists just pennies or nothing most times for their trouble.

    Spotify is just a 'legalized' form of Piracy really. Makes one wonder how the Artists put themselves in this position?
  • Reply 4 of 43
    gatorguygatorguy Posts: 21,098member
    The big labels may be pushing it but at least some of the little guys see it as a huge mistake to remove the ad-supported option.

    “Treating consumers like children and telling them that everything they’ve enjoyed about these streaming services is going to be taken away because the biggest record companies don’t like it, that’s another Napster moment,” quipped Charles Caldas, the CEO of Merlin Network."
  • Reply 5 of 43
    mac_128mac_128 Posts: 3,449member
    Spoiler:
    adrayven wrote: »
    Makes one wonder how the Artists put themselves in this position?
    Artists didn't put themselves into this position, at least not directly. Case in point -- one of the biggest pop stars in the business, Taylor Swift, cannot be found on Spotify, because she controls her music.

    Labels and publishers are the real bad guys here, for many more reasons than pimping out their artists for pennies to Spotify.
  • Reply 6 of 43
    bubbaonebubbaone Posts: 11member

    As a subscriber to Spotify, I think this is a solid idea.  Ad supported streaming such as Pandora, Iheart, Itunes Radio, etc. makes sense.

     

    If one wants to go offline, or pick and choose their own songs, etc. then paid only makes sense.

     

    And permitting artists to decide whether or not they want to be included in an add supported offline custom system makes sense as well.

     

    The record industry and artists only made big $$$ off recorded music for a very short period of time 60, 70s, 80s, 90s.  Musicians have been creating and performing since the beginning of humanity.  They never made much on recorded music prior to the late 20th century, and they probably never will again.  There was no shortage of music before, and there won't be in the future.

  • Reply 7 of 43
    lemon bon bon.lemon bon bon. Posts: 2,173member
    "Artists didn't put themselves into this position, at least not directly. Case in point -- one of the biggest pop stars in the business, Taylor Swift, cannot be found on Spotify, because she controls her music.

    Labels and publishers are the real bad guys here, for many more reasons than pimping out their artists for pennies to Spotify."

    Interesting comment. Artists controlling their creativity...sounds intriguing.

    Lemon Bon Bon.
  • Reply 8 of 43
    hydrogenhydrogen Posts: 228member
    Quote:
    Originally Posted by melgross View Post



    <..>



    And now that they do have this I for, because it's hardly be.ievable that they wouldn't see it now th at its being published, how will this change things? Will they add all of these companies to the investigation, or will they ignore them, and continue on with their investigation of apple?



     

     

     

    Undisputable evidence of Apple's conspiracy !

  • Reply 9 of 43

    The paid service will be ad free till they get everyone converted. Then it will be paid + ads - It's Cable TV mode.

  • Reply 10 of 43
    cnocbuicnocbui Posts: 3,613member
    Quote:

    Originally Posted by Mac_128 View Post

     
     

    Artists didn't put themselves into this position, at least not directly. Case in point -- one of the biggest pop stars in the business, Taylor Swift, cannot be found on Spotify, because she controls her music.



    Labels and publishers are the real bad guys here, for many more reasons than pimping out their artists for pennies to Spotify.



    Quite so.

     

    Appealing to concern for the poor suffering artists is the 'but think of the children' of music technology discussions.  Artists are ripped off by the publishers and vested music industry, not by consumers and players like Spotify.

     

    I saw a BBC news item recently:

    Quote:


     Warner Music owner Len Blavatnik is Britain's richest man with a £13.17bn fortune, according to the 2015 Sunday Times Rich List.


     

    You don't have to look far to see why artists are arguably not getting a fair share of the pie.  It's usually said that artists make very little from sales of their music and actually make the bulk of their income from live performances.

     

    Spotify isn't the artist's enemy.

  • Reply 11 of 43

    Apple likely hasn't had anything to do with this. Or, if they have, it's likely

     

    Eddy: "Hey, we want lower pricing."

     

    Music Industry: "Not while there are free tiers."

     

    Eddy: "Well, that's your choice. C'mon Phil, let's go to Sizzler."

     

    The music companies did this as an experiment, it's not working, they want to stop the experiment. Entitled people don't like losing their freebies.

  • Reply 12 of 43
    Quote:

    Originally Posted by cnocbui View Post

     



    Quite so.

     

    Appealing to concern for the poor suffering artists is the 'but think of the children' of music technology discussions.  Artists are ripped off by the publishers and vested music industry, not by consumers and players like Spotify.

     

    I saw a BBC news item recently:

     

    You don't have to look far to see why artists are arguably not getting a fair share of the pie.  It's usually said that artists make very little from sales of their music and actually make the bulk of their income from live performances.

     

    Spotify isn't the artist's enemy.




    Nice try, but as usual you twist the facts to meet your narrative. Blavatnik is an industrialist who bought Warner Music a few years back through his conglomerate. The guy's a petrochemical owner, of course he's loaded. But I suppose your little BBC fueled brain wants to blame the rich people again. :rolleyes:

  • Reply 13 of 43
    kent909kent909 Posts: 711member
    Remember when you listened to a thing called radio and they played music over the air and you had to listen to commercials. Oh wait you can still do that for free. So if what is wrong with streaming music must also be wrong with radio? Why is Pandora not mentioned in this. I have listened to Pandora free with commercials since almost day one. Works for me. If I have to pay a monthly fee my level, of expectation will rise.
  • Reply 14 of 43
    Quote:

    Originally Posted by kent909 View Post



    Remember when you listened to a thing called radio and they played music over the air and you had to listen to commercials. Oh wait you can still do that for free. So if what is wrong with streaming music must also be wrong with radio? Why is Pandora not mentioned in this. I have listened to Pandora free with commercials since almost day one. Works for me. If I have to pay a monthly fee my level, of expectation will rise.



    Not the same. The concept behind modern radio was that you'd hear it and then want to buy the album (and later the song). It's also not as on-demand. People who stream don't tend to buy music, so...

  • Reply 15 of 43
    kent909kent909 Posts: 711member
    Quote:

    Originally Posted by kent909 View Post



    Remember when you listened to a thing called radio and they played music over the air and you had to listen to commercials. Oh wait you can still do that for free. So if what is wrong with streaming music must also be wrong with radio? Why is Pandora not mentioned in this. I have listened to Pandora free with commercials since almost day one. Works for me. If I have to pay a monthly fee my level, of expectation will rise.

     

    Quote:



    Originally Posted by TheWhiteFalcon View Post

     



    Not the same. The concept behind modern radio was that you'd hear it and then want to buy the album (and later the song). It's also not as on-demand. People who stream don't tend to buy music, so...


    I still buy music and some comes from hearing it on the radio and some from listening to Pandora or iTunes Radio. The later makes it very easy to buy. I think if music is really good people will want to own it.  So maybe music isn't all that good anymore. Streaming is certainly more defined as to just choosing a rock, country or classical station. Although streaming at times is amusing. You create, for an example, an Eric Clapton station and the first song is Clapton but you don't hear another one for over an hour, in the meantime they are playing all kinds of music that you would never relate to Clapton.

  • Reply 16 of 43
    pfisherpfisher Posts: 758member

    Lower-priced pricing tiers would be helpful. Rdio seems to have caught on. And more lower-priced family tiers. Different product offerings.

     

    Why? Because most people are not going to pay for most of their music.

     

    Rdio seems pretty good and reasonable.

     

    These big corporations need to clue in that say, a family of 5 is not going to be paying for $9.99 each per month for music service. And most people don't want premium, they want something like terrestrial radio.

     

    So, obviously, the services would benefit to create different packages and different prices and see what people are most likely to pay for.

  • Reply 17 of 43
    zoetmbzoetmb Posts: 2,480member
    Quote:

    Originally Posted by cnocbui View Post

     

    You don't have to look far to see why artists are arguably not getting a fair share of the pie.  It's usually said that artists make very little from sales of their music and actually make the bulk of their income from live performances.

     

    Spotify isn't the artist's enemy.


    It used to be that artists didn't make money from tours - they toured to support the recording for which they did make (some) money, although the fact remains that the majority of artists never earned out their royalty advances and so never saw another penny.  In fact, when Atlantic held their 40th anniversary concerts at Madison Square Garden in 1988, chairman Ahmet Ertegun decided to set the royalties of any artist who had negative royalties back to zero, so that the acts who appeared at the show would start receiving royalties again.   Some of these very big classic artists hadn't earned a penny from their records since they signed their last contract.   I can't even imagine how frustrating it must have been for artists to hear their records on the radio, in commercials and to see their albums in record stores but never receive any money (unless they were also the writer or owned their publishing, which was rare).     

     

    In the documentary "Twenty Feet From Stardom", which was primarily about backup singers, it's revealed that Darlene Love, who sang lead on many of the Phil Spector-produced hits regardless of the artist credited on the label,  was cleaning houses to make a living before she decided to give singing another shot.   This is absolutely shameful.  

     

    It's true that groups who tour and play stadiums or big concert halls can make money, although it's a very rough life.   But most artists don't play those kinds of places - they play 100 seat clubs.  At the traditional 70% of the gate, the group has to split $700 to $1000 and that also has to cover all their expenses.   No one makes money playing small clubs.    I saw a poster the other day that said "a musician is someone with $5000 of equipment in a $500 car who drives 300 miles to earn $50."

     

    I would maintain that Spotify, Pandora and other sites like it are indeed the artists' enemies in that they reinforce the perception that music is no longer worth paying for (although certainly illegal downloads and 99-cent paid tracks did this as well).    All you have to do is look at total revenues of the music industry including licensing, which in the U.S., if you include inflation, is about 34% of its former 1999-2000 peak.   This isn't just about "digital" (which is the wrong term anyway as CDs are also "digital") - it's also about the change of the marketplace since the advent of the MP3 player from an album market back to a singles market.    (Taylor Swift being the big exception.)   Back in the (analog) days, traditional radio helped sell records, but streaming replaces record sales.   

     

    This notion that you don't make money from "A", but you make money from "B" is a false notion because it's inevitable that "B" will then pay less and tell the artist to make money from "A".   The fact is that anyone who makes use of an artist's work should be paying fairly for it.    

     

    Quote:

    Originally Posted by sog35 View Post

    giving away free streaming music was stupid in the first place.

    its a business model that won't lead to long term success no matter how many ads you dump in the users face.


    The problem is that it does make sense for the Spotify and Pandoras of the world - it's basically the radio model, but with a much larger and somewhat interactive playlist.   It doesn't make sense for the labels and artists, but the labels were desperate for any kind of revenue in a severely declining market and they also saw streaming royalties, as low as they are, as a lesser evil than illegal downloads.    Personally, I think all these fan loaded videos on YouTube of a spinning turntable or a couple of artist images playing to a song should all be taken down, even if the advertising that most display does send a few pennies back to the record label.   This is basically shoplifting.   I don't know what made people think that it was okay to post someone else's work.   

  • Reply 18 of 43
    kent909kent909 Posts: 711member
    Quote:

    Originally Posted by pfisher View Post

     

    Lower-priced pricing tiers would be helpful. Rdio seems to have caught on. And more lower-priced family tiers. Different product offerings.

     

    Why? Because most people are not going to pay for most of their music.

     

    Rdio seems pretty good and reasonable.

     

    These big corporations need to clue in that say, a family of 5 is not going to be paying for $9.99 each per month for music service. And most people don't want premium, they want something like terrestrial radio.

     

    So, obviously, the services would benefit to create different packages and different prices and see what people are most likely to pay for.


    Please elaborate on what you mean by packages.  

  • Reply 19 of 43
    freerangefreerange Posts: 1,589member
    Free streaming is a horrible business model and was done out of desperation. And doing low priced tiers is equally stupid - it is a continued race to the bottom while the artists make next to nothing.
  • Reply 20 of 43
    ecatsecats Posts: 272member
    Labels have limited ability to enforce this, rather this is Spotify seeding the market with fake-press because they're probably going to kill or drastically limit their free tier.

    Meanwhile competitors like Rdio are offering a similar service for a 1/3rd of the cost.

    Spotify execs have also been secretly trying to drum up anti-trust against a relaunched iTunes Radio or Beats music subscription service.
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