NY Post reported that music streaming giant Spotify is planning to limit the lastest, high-profile releases to premium-only subscribers. Spotify’s new move seems aimed at two things: require a free subscriber to have a Spotify premium account and driving more revenue around music superstars.
There was also a second model under discussion in which content would be limited entirely to premium subscribers. Another one would have “time-restricted exclusives for paying subscribers.” This seems to be what Spotify is aiming for, as the New York Post writes that the Swedish company, under tremendous pressure to create long-term deals with music labels in order to put off a “months-long impasse,” is willing to put in the “windowed” model similar to Hollywood releases. In this translation for streaming music, big releases would be paid only for a time, then free after a substantial wait.
Spotify is currently operating on “rolling month-to-month” contracts with the big three music companies: Universal Music Group, Sony, and Warner Music Group. Currently, Spotify pays out the big three labels around 58% of revenue. Sources close to the company told the Post that Spotify wants to lower its revenue split, and “make its finances more attractive to potential investors,” with current gross margins around 20 to 25%. Its rival, Apple Music, enjoys a much higher gross margin of close to 40% according to a Bloomberg report.