Spotify faces a tough future. Its business model isn’t great, it faces competition from the biggest tech companies in the world and just recently did it start getting in the good graces of the very musicians on which it depends.
That’s why Spotify could be making some changes, even one that they’ve tried really hard to avoid.
Spotify is in talks to begin offering some new music only to paying customers, changing a policy that it has held since its earliest days that the company has argued is essential for its success, according to various media reports. Currently, Spotify’s entire library is available to stream for free.
A source familiar with the negotiations confirmed the ongoing talks and discussions of offering some new music only to paying Spotify subscribers.
This is a change that musicians and much of the music industry have clamored for. Taylor Swift remains the biggest example of Spotify’s impasse over requiring all music to be available to non-paying users. Swift pulled all her music off Spotify in 2014, with only a few tracks remaining available.
It’s not immediately clear just what this will mean. Spotify is currently in crucial negotiations with music labels for new licensing agreements. Companies like Spotify pay a large chunk of their revenue to labels and musicians based on these negotiated agreements.
The results of those negotiations will be incredibly important for the company, as they will have a major impact on Spotify’s business prospects going forward. If Spotify can concede a bit on the “all the music needs to be on the free tier” thing, it could find itself with a better deal as far as how much it has to pay out. This would make it easier to turn a profit, something that has eluded Spotify thus far.
And while it’s not a disaster that Spotify isn’t yet profitable (the company has long said it will take time to build the pay-for user base to the adequate level), the company needs to begin moving in that direction. Spotify now counts 50 million subscribers, and has shown signs of improvement as far as how much money it’s losing compared to total sales.
Meanwhile, the music industry has also been warming to Spotify and streaming music more broadly, thanks primarily to considerable growth in how much money is being generated from these services.
Spotify declined to comment on the reports.
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