Spotify, the popular music streaming service, is planning a change of their revenue model by introducing a free ad-supported service on mobile devices as reported by the popular website Wall Street Journal. A formal announcement for the same is expected on December 11 at a Spotify event in New York.
Up until now if you might be aware, Spotify users did not have access to free ad-supported music streaming. Rather they were required to shell out a monthly fee for access to the music stream. Only the users of Spotify on the desktop and laptop platform had access to the free ad-supported service and it is quite popular due to the same and also giving tough competition to rivals such as Pandora.
According to sources familiar with the matter, the Sweden based company has struck deals with the three major record companies such as Sony Music, Universal and Warner after negotiations that went on for close than a year.
Previously, Spotify hoped that once users would be adequately hooked on to the ad-supported music streaming on their desktops, they would want a similar experience on their smartphones and would be willing to pay $10 monthly for the portability to listen to unlimited songs on any number of devices you may own. And that too, without being bombarded with advertisements. There are close to 6 million users out of the total number of around 24 million subscribers of Spotify who are paying for the premium service.
With the subscription barrier no longer in place, Spotify would stand to get many more users hooked on to their platform, which in itself matters much to keep abreast in the competition. After all, the more the number of users, the more bargaining power you stand to gain with music record labels. Also, we assume that Spotify is earning well enough from advertisements to contemplate about such a move.
The number of free songs (which would be based on the user’s choices) you would be able to listen on the mobile platform would most likely be limited for free users and served with ads just like any other Freemium model. However, Spotify would surely hope that they convert a few of the free users to their premium offering, the advantages of which we have already highlighted above.