How Spotify Is Spending Millions on Lobbyists to Keep Streaming Free…

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Free streaming means more users.  More users means a bigger service.  A bigger service means a bigger IPO on Wall Street.

Any questions?

A few months ago, it surfaced that Spotify was committing millions to hire six separate lobbying firms on Capitol Hill, despite losses in the hundreds of millions and massive outcry from unpaid or underpaid artists.  Now, we’re getting an idea what that firepower is being used for: (a) to stymie the massive competitive threat posed by Apple Music and (b) to keep streaming free.

According to details now surfacing, a major priority of Spotify’s lobbying effort was to keep Apple Music from cooperating with major rights owners to make listeners pay.  That effort was completely successful.

The first payoff was a round of action by two State Attorneys General in New York and Connecticut against Apple Music.  “Spotify’s lobbyists have quietly made the rounds in D.C., whispering to lawmakers for months that Apple’s new music offering threatens to stifle its competitors, according to sources familiar with the discussions,” DC insider Politico reported this morning.

“The apparent goal has been to raise antitrust suspicions about the iPhone giant, which faced a previous government lawsuit over its pricing of e-books.”

Now, that lobbying war appears to be focusing on other powerful allies, including the far-reaching Federal Trade Commission (FTC).  As part of the expanded effort, Spotify also appears to be focusing on Apple’s 30 percent cut of App Store transactions, which could be viewed as a competitive chokehold on iOS competitors to iTunes.  In fact, last week, Spotify surprise-slapped Apple by directly emailing its subscribers with instructions on how to separately download the iOS Spotify app and circumvent Apple’s standard 30 percent cut.

The question is whether any of this is good for artists, an increasingly unhappy — and unpaid — group.   “The entire music economy is evolving, and we want to make sure it’s evolving in a way that’s good for consumers, rights holders, musicians … the entire business,” Spotify’s head of communications and corporate policy explained to Politico, in the same piece.

The lobbying action is happening against some high-stakes negotiations between Spotify and major labels Universal Music Group (UMG), Warner Music Group (WMG), and Sony Music Entertainment, with renewals up in October according to Digital Music News sources.  Initially, labels were pressuring Spotify to sharply curtail its open-ended, ‘freemium’ access plan, though Spotify aggressively pushed back on those demands.

According to sources, Spotify CEO Daniel Ek vowed never to erect a paywall like Apple Music, and would even shut down the business if faced with such an ultimatum.

Labels seem to be backing own, and shifting discussions more towards ‘gated content,’ according to sources.  That’s a structure that superstars like Adele and Taylor Swift have been demanding for years.

More as it develops…

Image: Kevin Spacey promotional still as President Frank Underwood in Netflix’ House of Cards. 


25 Responses

  1. Lyle David Pierce III

    Spotify (and Daniel Ek in particular) should have been more careful for what it/he wished for as it now seems that they have gotten their wish in the form an apparently legal free music service called StreamSquid, “and one of its inaugural features is a Grooveshark playlist importer.” A few internet articles have even dubbed the new service as a “Legale Spotify-Alternative” and the “nuevo ‘Spotify.'”


    • Anonymous

      Well there is evidence Spotiify has harmed the music industry. There is zero evidence Pandora has harmed the music industry. So no.

      • Remi Swierczek

        Both, Spotify and Pandora harm music industry and themselves!

        Convert both to discovery based $5B music stores and capitalization of Pandora & Spotify IPO will exceed $10B!

      • superduper

        “Well there is evidence Spotiify has harmed the music industry. There is zero evidence Pandora has harmed the music industry. So no.”


      • superduper

        “Well there is evidence Spotify has harmed the music industry. There is zero evidence Pandora has harmed the music industry. So no.”


        • Anonymous

          Oh? Care to prove me wrong? You’ll be extremely hard pressed to find any evidence Pandora has actually harmed the industry. Spotify… you don’t even have to look.

          • David E

            Of course. It seems basic. Pandora is just radio – not very different. If every service was non-interactive (not on-demand), I’d still be buying music from iTunes… actually I’d probably be buying even more music. But, I dont, because I already have it via Spotify.

            An apples to apples comparison is more like Pandora v Terrestrial Radio. And, as we know, Pandora pays a hell of a lot more than radio.

          • Anonymous

            Actually, Pandora isn’t radio and is not entitled to compulsory licensing. This is why Pandora purchased a terrestrial radio station to hedge their bet. If the PRO’s are serious about getting on the offensive, instead of being reactionary, this is where they need to place their legal challenges.

      • CG

        Tim Westergren would rather spend millions in legal and lobbyist fees to keep the rates they pay songwriters as close to $0 as possible, meanwhile he builds a multi-billion dollar company on their backs. Plenty of harm is being done.

      • iamthegif

        You know what harms the music industry? lackluster music, far greater supply than demand, greed, lack of innovation, Spotify is the least of its concerns.

  2. TriptychSound

    So this is where the ‘anti-competitive practises’ suit I read about in Forbes against Apple could likely be coming from, because adding your product to a market and getting people to pay for it is so anti the markets.

    Spotify are shysters through and through. Worse than KDC. At least he was just out for his own flabbly benefit.

  3. Tcooke

    Copy remi. Uv seen the image of before meth, then after and its a trash can. Tech is meth.

  4. Anonymous

    So, how does this compare to what Apple spends annually on lobbying?

  5. Eilo

    1. Apple’s diamond in the rough will be Beats 1,2,3 radio etc. And thats where the artists will make more $$ into the future. Beats is the rebirth of radio. Beats is REAL radio and will establish radios NEW future….Radio Without Borders!
    2. pandora is not radio. There’s no voice. Faceless. It’s a jukebox. It’s slick elevator music (muzak). It’s fake…smoke and mirrors purchase of small South Dakota radio station (lower rights rates), to get a reduction rights rate, but it won’t pan out in the long term, after the lawyers and lobbyists get their shekels.
    3. Spotify’s maxed out. An IPO in the works? …Have you checked pandora’s stock price and performance lately. Can you say fizzle! It’s a joke.

    Apple will win it all. Why? Because they’ve invested more and longer than any of these lesser companies, and the only ones that know what they’re doing at this scale. The others don’t have what it takes to play with the Big Dawgs. Apple will drink all their milkshakes.

  6. There is something...

    The problem with Spotify IPO is that they have to find someone who wish to compete with Apple, Google and probably Facebook… Not for everyone obviously…

    • Paul Resnikoff

      There are many issues confronting Spotify on its Wall Street IPO. Actually, I’m hearing that the biggest issue is non-existent label deals after Oct. of this year (currently in re-negotiations). That’s not a confidence builder for investors.

      • Alex

        Paul – you must realize that the labels will give Spotify a good deal this time around!

        They are so invested and stand to make billions with a big IPO. (Of which little will go to artists).

        But the deals will be short. 1-2 years as usual. Then once they’ve lined their pockets they can play hardball.

  7. Rickshaw

    Don’t most companies spend money on lobbyists? How is this different?

    • Eilo

      Some have better lobbyists, aligned with politicians/ representatives who can move the needle and better teams of solicitors, than others.

  8. Eilo

    Pandora (stock symbol P)

    • On May 28, P share was at a daily high of $19.02
    • Today, July 14, P share closed at $15.25
    • Since May 28, P share price is of (- $3.77)
    • That’s down 19.821241%

  9. Paul Lanning

    The artists’ deals are with their labels, not Spotify. THE ARTISTS’ DEALS ARE WITH THEIR LABELS, NOT SPOTIFY!

  10. iamthegif

    Do artists realize that paid subscription platforms don’t benefit them? If the streaming platform is guaranteed $10 no matter how much music a subscriber streams, where the incentive to drive the user to stream more music? As artists we only make money when our music is streamed. The major labels and record companies are the ones that have equity in Spotify and get paid from subscription fees no matter how much of their music is streamed, not artists.

    Paying for a subscription to Applemusic, Spotify, Tidal, etc. is not the same as paying for music. The big music corporations aren’t going to manipulate me into thinking what’s in their best interest is in mine as an Indie artist.

  11. Gotya Covered

    Your kidding right? Spotify is making money out of music true but it is also giving a musician a platform. No musician is forced to use Spotify in fact some don’t. It is up to them.