Music and video streaming service provider Spotify had made it clear that it would make no discrimination among its paid users and ad-supported non-paying listeners when it comes to new releases on its platform because doing so will make the app very complex. It believes that music is for everyone. But now, as it is makes its preparations to reach the IPO, it has to make some changes in its own principles, and therefore, is embarking upon discussions regarding royalty rates with some big names.
As per a report by Verge, Spotify has confirmed signing a deal with Universal Music Group to pay them less per stream, however, the new releases, for at least two weeks ,will only be made available to Spotify Premium subscribers. Non-paid listeners can not stream the premium content for now. Similar updates may roll out for other labels as well.
Though the ad-supported users may feel unsatisfied with these new features, this decision will provide a substantial financial support to Spotify over the long run. Also, the time has come when customers need to realize that for services like Spotify to continue as an independent music company, they must cut some corners of customer satisfaction.
Spotify is one of the best music streaming service which offers an on demand free tier to the customers not willing to subscribe by paying $10 monthly, which keeps them connected to the service. Some of them eventually get completely engrossed with the service and decide to pay for removing ads and restrictions.
Meanwhile, unlike Amazon, Google or Apple which provide music as a complementary service, Spotify is solely a music streaming service and royalty is one thing it certainly looks for. Today’s deal is just a clear indication that Spotify has tightened its grip over the music labels. The popularity of its free tier service has now now reached an extent where it can bag lower royalty per song simply by holding back the new releases from its users.