Streaming is quickly becoming the dominant form of accessing music and the music industry isn’t very happy about that. More precisely, big labels like Universal Music Group aren’t fond of the freemium model that services like Spotify have implemented which allow users to listen to music for free so long as they listen to ads. Several labels have started to pressure Spotify to abandon this model.
It’s no secret that the digital age hasn’t been kind to the music industry. Streaming services like Spotify, Rdio, and Pandora have buoyed a long-declining market with the support of eager music labels, but it seems those very same labels are starting to get nervous about their revenue streams. Universal Music Group, the largest of all labels, is beginning to question the “freemium” model that helped bring in over a billion dollars in revenue from US streaming last year. According to the Financial Times, Universal is leveraging current contract negotiations with Spotify to pressure the streaming service to put harsher limits on its free service. The label hopes that such a move would convert more free users into paid subscriptions, which cost $10 per month. CEO Lucian Grainge publicly stated his concerns with the freemium model last month, when he said, “Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors.”