As Spotify nears deals with the major record labels they could be changing how their platform works, with certain music exclusive to paid Premium users.
After months of negotiation between Spotify and the major labels it looks like a final decision could be made that appeases both sides, except perhaps the listener. Spotify were looking for lower royalty payments to labels to help them move towards making a profit, whilst the labels have criticised Spotify’s free option, saying that it devalues music by making it so readily available.
Now rumours are spreading amongst the industry that talks have progressed to benefit both Spotify and the labels, with new music releases being made available exclusively on Spotify Premium. Whether this will mean any new music from major labels, selected hot releases, or whether they will be specifically exclusive to Spotify (which Spotify have refused to do before) isn’t clear. The sources who revealed the news say that new releases will only be exclusive to Premium for a limited time before being made available to free users.
Whilst it hasn’t been confirmed and doesn’t necessarily mean negotiations are ending even if it is true, but it seems like the best way to appeal to all parties. Whilst some users may not be happy with the change it would certainly lighten the industry’s view of Spotify, and making them only temporarily exclusive means that users don’t lose out if they can’t/don’t want to pay for music, they will just have to wait.
Spotify have also been planning an IPO for a long time, however were rejected by Wall Street this year for making too much of a loss year-on-year. A lot of Spotify’s lack of profit despite their massive success is down to licensing costs from music labels, meaning that if this deal is confirmed then it could be Spotify’s first steps to becoming a profitable company.