Major labels Universal Music Group, Warner Music Group, and Sony Music Entertainment are putting heavy pressure on Spotify to limit their free access window to three months. And now we know why: according to data just shared by executives at the Big Three with Billboard, 69% of Spotify premium subscribers make the decision to convert from free within 90 days.
Spotify most recently reported 15 million paying subscribers, but a giant stock of 45 million who aren’t. “We’ve looked at the data, and what has become clear is that the free funnel isn’t working,” a major label also told Billboard over the weekend.
“69 percent of those who subscribe after using the free tier do so within 90 days.”
Meanwhile, Spotify is firing back, and flatly denying that labels are pressuring for limitations on free access. And, denying that there’s a problem: “Freemium is the only thing that’s working,” a Spotify executive quipped back.
But working for whom, exactly?
All of this may not be going to a happy place for the hyper-valued Spotify: Spotify is currently in active negotiations with Universal Music Group, and Billboard revealed that the UMG contract officially lapsed at the end of 2014. Unclear is what other deadlines are looming: just recently, Spotify’s 2011 contract with Sony Music Entertainment leaked, suggesting that negotiations are still ongoing on a refreshed deal. The CEOs of both mega-labels have been extremely critical of unlimited free.
And then comes Apple. As WWDC descends upon San Francisco, onlookers are waiting for the mega-mothership of ‘Apple Music‘ to land, complete with significant limitations on free — and major demands that Spotify do the same.
Top: Sony Music Entertainment chairman and CEO Doug Morris; image Spotify CEO Daniel Ek from leweb, shot by Magnus Höij and licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).