Digital Top Stories

Spotify extend unlimited free listening in the US, reduce freemium limitations in Europe

By | Published on Friday 30 March 2012

Spotify

Spotify announced it was making new changes to its freemium service yesterday, upping the amount of free content available via the streaming platform in most territories.

As previously reported, while Spotify Free originally offered totally unlimited free streaming, the attraction of the premium service being the removal of ads and the ability to listen via mobile, the freemium offer was subsequently scaled back so that free users – after a trial period of unlimited free listening – would be limited to ten hours streaming per month, and would only be able to play any one track five times. In America, when the service finally launched there last year, everyone was offered unlimited free listening at the outset, but with the warning that the restrictions by that point operating in Europe would eventually apply.

It’s thought record companies on both sides of the Atlantic pushed for the free option to be scaled back last year, many rights owners becoming concerned that the freemium service was not viable in its own right, even with slowly growing ad revenues, and that therefore its role was really to encourage new customers in who might then be persuaded to upgrade to the subscription option. In that regard, some reckoned, the unlimited free service was too good. American labels, in particular, stressed about the freemium bit of Spotify, even though their European divisions had already licensed it, and were now shareholders in the streaming music business.

That said, it was thought Spotify too was increasingly focusing its efforts on the subscription part of its business, which was much less risky in terms of the royalties it had to pay out to the record companies, so the decision to scale back free probably wasn’t totally to do with the major labels making big demands before agreeing to licence the service in America.

Either way, the restrictions due to come into play on Spotify Free after six months in the US never arrived, and yesterday the digital firm told its American users that unlimited free listening will stay for the foreseeable. Meanwhile, in Europe the ten hours a month limit will stay, but in most countries the five play limit will go (not in the UK just yet, though team Spot say they are “working on that”).

It’s not entirely clear what has motivated both Spotify and its label partners to once again enhance the freemium package. It’s possible rights owners, especially Stateside, are impressed with the digital company’s conversion rates from free to subscription, and recognise that having the freemium platform is helping Spotify expand its premium user-base at a rate none of its competitors can match.

And for those labels who reckon the subscription service business model is viable long-term, which currently includes all four majors, taking a hit on the free service now might seem worthwhile. It’s also possible Spotify has seen its ad sales grow significantly in the last few months, reducing the risk of the freemium offer a little for all parties. Either way, the move will be popular with freemium users, and will further boost Spotify’s competitive advantage over other all-you-can-eat streaming services.

Elsewhere in Spot news, the streaming company announced a new alliance with The Echo Nest that will see the latter integrate its API with Spotify, which means that the ever growing network of app developers utilising Echo Nest’s music intelligence algorithms, and content and social media partnerships, will be able to develop apps for use within the Spotify platform.



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