If you use Spotify you will know that there are two types of account: free and paid. Although the company does not stop growing in paid users, Spotify still has problems to be profitable. According to the Financial Times, the company would be negotiating with the different labels what will be available only to users who pay their monthly premiums. These premium users will have access to the latest hits before the users who do not pay.
Spotify has a serious problem with royalties (the money perceived by artists and record labels). Without going further, the company paid 1.6 billion dollars in royalties record companies. However, its income was of 1.3 billion dollars. In short, Spotify had losses of 320 million dollars.
According to the source, Spotify would not have been too pleased with this measure at first. Apparently, the agreement seems to imply that this new measure will be implemented in favor of paid users. Spotify would stop paying so much money in royalties, something that becomes vital for a company that has plans to go out to bag in a short-medium term. Leaving aside the issue of money, let’s try to explain it with a simpler example so that we all understand it.
Ed Sheraan’s new album is a top 10 in much of the world. At Spotify, both a paying and free user can listen to all of Ed Sheraan’s songs. What Spotify wants is that, if you are premium users, you can access before one that does not pay to these new successes. It is still a way to capture new paid users, who currently have other advantages such as music at 320 kbps and no advertising. At the moment there is no official statement from the company.
Do you consider it a good measure? Let us know in the comments section.