The FT reports that stalled negotiations with the Major record labels are back on track for Spotify. Looking to IPO the streaming champions need their licensing deals to come down; and it seems they are willing to sacrifice their 'freemium' model to get there.
Up to now Daniel Ek has defended Spotify's free subscriber tier against any and all critics up to and including one Taylor Swift, leading to "Bad Blood" between the streamer and some of the artists and labels it relies upon for content.
But now Spotify has passed 50 million paying subscribers, it looks as though Spotify's calculus has changed. Moving from the classic start-up's push for subscriber numbers towards the long term viability of their crucial rights deals.
So the Labels would get a lesser rate over a bigger share of the streaming pie. What proportion of that licensing revenue ends up with their artists of course is a separate question.
As part of the proposed deals, the music companies have agreed to trim the royalty fees that Spotify pays for their songs, according to people familiar with the discussions. In exchange, Spotify would restrict the biggest album releases to its paid tier for a period of time — a substantial concession after years of friction with pop stars including Taylor Swift, who pulled her music from the platform in 2014. Recorded music companies, and the likes of Ms Swift, want to limit Spotify’s free service, which generates far less revenues than paid subscriptions.