Spotify Is Now Preparing to Offer Premium-Only, ‘Gated’ Content

Spotify

The wheels on this change started in early August, as first reported by Digital Music News.  Now, in the wake of high profile holdouts from Adele and Coldplay, Spotify is preparing to restrict certain content to paying subscribers only.

The exact start dates for this restricted ‘windowing’ are uncertain, though Spotify could toe the waters within weeks with limited tests.

Leaks from the negotiating table are already emerging, with plenty of details undoubtedly ahead.  “In private talks, Spotify has told music executives that it is considering allowing some artists to start releasing albums only to its 20 million-plus subscribers, who pay $10 a month, while withholding the music temporarily from the company’s 80 million free users,” the Wall Street Journal reported.

(The Journal, like other mainstream publications, often misreport the average price point for paying subscribers, which is almost certainly below the $10 ‘asking’ price.)

 

Spotify Free versus Paid

This will initially be a slow-going approach, with the streaming giant preferring to carefully observe the effects.  Initially,  select superstars only (on the level of Coldplay and Adele) will be receiving special consideration, according to separate sources.

The cave-in could be linked to Adele, though major labels Universal Music Group, Warner Music Group, and Sony Music Entertainment have been pressuring Spotify for months to move towards ‘gated content’ or limited free trials.  As reported extensively by DMN, that pressure recently shifted to flat-out threats not to renew all-important licensing deals if Spotify refused.

Now, Spotify is backpedaling, despite a near-certain avalanche of artists demanding ‘windowing,’ premium-only exclusions.

The shift also represents a belated victory for Taylor Swift, whose refusals to license Spotify were brushed aside by a cocky Spotify brass.  Indeed, Swift’s high-profile stance on Spotify caused an unprecedented surge of new attention and users for the platform at the tail end of 2014, and a lingering feeling that superstar holdouts were mere details.  That is still arguably the case, especially with Spotify expecting to cross 100 million total users in the near-term.

Spotify


Then again, without critical catalogs from big labels, 100 million can deflate pretty fast (as can IPO plans).  Separately, Spotify may also be feeling heavy pressure from Apple Music, a paid-only streaming service that offers a limited, three-month trial.  Indeed, influential Apple executives like Jimm Iovine may be asking ‘WTF’ to big labels, who are still licensing Spotify’s freemium party and stunting Apple Music’s growth.

Throughout, Spotify executives have been staunchly resistant to a paid-only approach, though the specter of more artist pullouts and massive licensing problems could be changing that attitude.

More as this develops!  Send any tips to [email protected], or (310) 928-1498 (complete confidentiality protected).  

Image of gate by NannyCam; image of Daniel Ek by Magnus Höij, both licensed under Creative Commons Attribution 2.0 (CC by 2.0).  Graph by DMN, compiled from public Spotify statements.  Lower image by Sorosh Tavakoli, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

 

17 Responses

  1. Anonymous

    “select superstars only (on the level of Coldplay and Adele)”

    So, just another Spotify fail…

    Reply
  2. Anonymous

    The hilarious part is that there is no part of anything in the official Spotify statement that says they’ll be moving forward with anything like this.

    Only that it was talked about for the Coldplay release, and then passed over for a week long overall window and directly onto every tier of the site.

    But hey, these ad impressions can’t create themselves amirite guys??

    Reply
  3. instagram.com/byazrov

    Apple Music, at least on Android, is so terrible. I wonder how Apple plan to survive in this biz at all?
    Spotify needs to come to new markets. In Russia there’s no real competition so far.

    Reply
  4. Anonymous

    kids don’t care or understand “gating”. they just want the music. give the people what they want.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Pretty much, at least if the status quo holds. But if Spotify makes a significant move towards gated or premium-only, you may see things change dramatically on the YouTube front. Already, we’re seeing some moves by VEVO to shift more towards subscription-based content, and VEVO (JV between major labels at a top-level) in many ways represents the most coordinated industry ‘reaction’ to YouTube to date.

      My point is: don’t assume YouTube is a static, totally-free platform moving forward.

      Reply
    • Anonymous

      Google will be getting sued soon, so one day you’ll wake up with that situation somehow magically fixed overnight.

      Reply
  5. superduper

    Even this may not be good enough. Of course it may be slightly better than freemium, but even still how much of a difference is free vs paid streaming to artists?

    Reply
  6. GGG

    I don’t think this is going to have as much impact as people think, and probably won’t even “deflate” their 100M users.

    Major labels have a vested interest in the service, obviously. They do not benefit from hiding all, or even a huge chunk, of their stuff behind a paywall if it’s going to kill users. Swift and Adele are both technically indie artists so they can throw their weight around much easier. Yes the majors will want to window their biggest artists this way, but physical/digital sales are still falling. It might not make any sense to window many, if any, acts below superstar level. Or at least for longer than release week or so.

    For indie acts/DIY acts/smaller major acts, it might not even make sense. Forgo tens/hundreds of thousands or hell, maybe even millions of streams to sell a relatively small amount of records? Financially it might look better in the short term, but you’re turning yourself off from non-premium playlists, non-premium discovery, targeted ads to non-premium users, etc. It will be a money vs building fanbase issue that will probably be on a case by case basis.

    Bottom line is, some huge chunk of artists are not going to start windowing to premium-only because it is not in their best interest. You’ll probably see a surge in release week windowing, as that can certainly help, but past that it won’t make too much sense.

    Reply
    • Danwriter

      I agree with this as an economic assessment, but the perceptual message that this also sends is considerable. Windowing available to a select handful of artists formalizes what is already a de facto dominance of a Mitt Romneyesque one percent in music. Yes, there’s a gate here, and it closes behind each limo as it enters.

      Reply
      • GGG

        Well, yea, regardless of whether I think it’s the best option or not, it’d certainly be pretty dumb to only allow some acts, after the trial period. So hopefully it’s only limited for a short time.

        Reply

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