Charging for Ad-Supported Streaming? Sony Music CEO Says It’s Time for Freemium Users to Begin Paying ‘A Modest Fee’

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rob stringer
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During a recent presentation, Sony Music head Rob Stringer displayed the pictured slide when making the case for an additional fee on ad-supported listening in select markets. Photo Credit: Sony Group Corp.

It’s time to begin charging music streaming platforms’ ad-supported users – at least according to Sony Music Entertainment (SME) head Rob Stringer, who’s calling for the implementation of “a modest fee” in “mature markets.”

Stringer voiced support for ad-supported charges during a presentation delivered as part of Sony Group’s 2024 business segment meeting. Diving into the relevant remarks, the SME CEO didn’t hesitate to tout the revenue success of streaming price increases.

Since announcing heightened Premium costs in the U.S. and many other markets last summer, Spotify, now reportedly plotting further upticks, has added a substantial number of subscribers. Building on the point, Stringer voiced the belief that the “price gap between free and paid has gotten wider” – before entreating “our partners” to “close that gap by asking consumers using ad-supported services to additionally pay a modest fee.”

Of course, “our partners” could very well be perceived as a diplomatic way of referring to Spotify, which reported an average of 388 million ad-supported monthly active users (with nearly half the individuals residing in Europe or North America) for Q1 2024. Moreover, Spotify’s foremost competitor, Apple Music, doesn’t offer an ad-supported tier.

“While free tiers attract billions of monthly users,” Stringer said during the presentation, “their poor contribution to streaming monetization means their primary purpose is to convert users into paying subscribers. The value of the paid-music product remains incredible, and we appreciate that our partners recognized that with price increases over the past year.

“However, it also highlights [that the] price gap between free and paid has gotten wider. In mature markets, we hope that our partners close that gap by asking consumers using ad-supported services to additionally pay a modest fee. This would help develop the segment of the streaming business to be more than just a marketing funnel for paid subscription. And still be a tremendous value to users.

“We have a shared interest in [the] better monetization of free tiers. And at Sony Music, we think everyone is willing to pay something for access to virtually the entire universe of music,” he proceeded.

With “mature markets” presumably meaning the U.S., Canada, and some European nations, it’ll be interesting to see how Spotify responds to the rather direct call. At present, though, evidence suggests that charging for ad-supported listening might not be in the near-term cards.

First, the current system appears to be working relatively well for leading players, who possess considerable sway at Spotify and elsewhere. Notwithstanding the aforesaid price increases and the uncertain economy, Spotify’s paid-user base expanded by 14 percent year over year to an average of 239 million subscribers in Q1 2024. Also as previously mentioned, new price bumps and add-ons are reportedly forthcoming for the platform, which undoubtedly wishes to avoid overwhelming customers with fresh charges.

Then there’s the long path Spotify and others followed en route to embracing a $10.99-per-month U.S. cost for individual accounts. Contrasting their video counterparts, music streaming platforms have largely overlapping content libraries, charge (for the most part) the same prices, and are generally hesitant to bump the latter.

Meanwhile, Stringer himself acknowledged ad-supported accounts’ potential to bring users into the streaming ecosystem – possibly laying the groundwork for subsequent subscribership conversions and, in any event, generating advert revenue. Listeners can already access music for free, without signing up, via YouTube Music and YouTube proper – a point that seemingly renders freemium charges significant hindrances to Spotify’s model.

Worth reiterating in conclusion are the recent responses to a Spotify Premium price uptick in France as well as Pandora Premium adjustments in the States. Said Pandora pricing adjustments only brought the SiriusXM-owned platform’s individual package in line with the $10.99-per-month standard cost in the U.S. Nevertheless, a number of longtime users expressed dissatisfaction with the development.