IT MAY BE STILL ON THE RECEIVING END OF FUNDING, BUT THE BIGGEST NAME IN MUSIC STREAMING IS STILL WITHOUT PROFITABILITY. PUSHING THE LABELS TOWARDS A LOWER PRICE MIGHT HELP, BUT WILL THE LABELS BITE?
Spotify is still struggling to make its business model pay, and its latest attempt to bring in the bucks won’t win it any fans amongst the record labels. The firm is due to enter into the latest round of talks with the music industry and, according The Verge, will attempt to push the labels’ licensing fees down even further. Discussions have already started with Warner Music, and Sony and Universal are expected at the table in the next few weeks. The music streaming firm also wants to extend the free version of its service to mobile users, which is currently set at a 30-day trial.
All of this begs the obvious question: what is in it for the majors? Well, quite a lot rests on it, actually. The Verge points out that the leader of the music pack is, obviously, iTunes, but with music downloads decreasing alongside CD sales, and Apple’s subscription radio service at an impasse due to licensing niggles, Spotify needs to succeed–not just for itself, but for the music biz. But not all of the artists are happy with the firm’s business model, Adele being a case in point. So, how will the labels accept being squeezed? Not at all, if the negotiations with Apple are anything to go by. And yet…
And yet, Spotify has quite a big card in its hand to play. The firm, whose growth rate of subscribers is bigger than that of Netflix, has been busy persuading users to convert from the advertising-supported free model to a paid-for version–and in some markets, the take-up rate is close to 20%. If that’s a nice enough carrot for the record labels to have, then Spotify could well get its way on the licensing rates as well as the mobile plan front.
Fonte: Fast Company