http://www.ft.com/intl/cms/s/0/5645cf6c-ce73-11e4-900c-00144feab7de.html#axzz3VDqO6OQ5The “freemium” model used by Spotify to amass 60m users and 15m paying subscribers around the world is facing a new challenge just months after the pop star Taylor Swift yanked her albums from the music streaming service.
The Shake It Off singer mounted a high-profile publicity campaign against Spotify at the end of 2014, claiming the service was undervaluing her music by allowing people to listen to it free of charge. Now, Universal Music Group, the world’s largest music company and home to acts ranging from Sam Smith to Katy Perry, is using licence negotiations with Spotify to push for changes to the company’s free service, privately arguing that it is not sufficiently distinct from the its paid-subscription tier.
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A person close to Universal says there was clear evidence the availability of free music on Spotify was hurting digital downloads from stores such as Apple’s iTunes. “The market data really speaks for itself,” the person says. “It’s clear that the key to success for artists, consumers and Spotify alike is developing an offering that drives more free users to the paid tier.”
Spotify has resisted tightening or changing the free aspect of its service: it says doing so would slow the conversion of free users to paying subscribers and likely send those users to pirated music or free sites such as YouTube. “Without free, pay has never succeeded,” Jonathan Forster, who heads the Nordics region for Spotify, tells the Financial Times. “We’re one of the greenest shoots of growth in the industry. We don’t want to destabilise that. We think that this model works.”
http://www.rollingstone.com/music/news/major-labels-question-free-model-20150320#ixzz3V2w4nhlp"We need to accelerate the growth of paying subscribers — that's a slightly more positive way of saying we need to limit free," says a source at a major label. "You can make the subscription service more attractive, with high-resolution sound or exclusive albums, or you can make the free version worse, by limiting the amount of stuff you can listen to."
Labels really don't like this "free" business.