Report: Spotify lobbies record labels to extend ad-supported service to mobile
Spotify will petition its record label licensing partners for the rights to extend its ad-supported free streaming music option to mobile listeners, The Verge reports.
At present, only premium Spotify subscribers may access the service's 16 million songs via mobile device; Spotify's apps for operating systems including Apple's (NASDAQ:AAPL) iOS, Google (NASDAQ:GOOG) Android and Microsoft's (NASDAQ:MSFT) Windows Phone are free to download and include 30 days of free service, but once the trial ends, consumers are charged $9.99 per month to access the full slate of services.
But citing sources close to the talks, The Verge states Spotify is in the process of renegotiating its licensing deals with major labels Warner, Sony and Universal and is lobbying to offer its free, ad-subsidized tier (currently available via the desktop) to the mobile channel. Proponents argue that opening up free access to smartphone users will increase overall usage and advertiser reach; opponents will likely contend that if mobile access is no longer an incentive exclusive to the premium tier, Spotify's paid subscriber numbers will plummet.
The Verge adds that Spotify will ask the labels to consider substantial price breaks: About 70 percent of the startup's revenues are allocated to licensing fees, with another 20 percent covering customer acquisition costs. The remaining 10 percent pays Spotify's other costs, including technology maintenance and upgrades. Sources say the current cost structure effectively negates Spotify's profits.
A Spotify spokesperson declined to comment.
Spotify is available in 17 countries and touts more than 20 million active users across all platforms. In some markets, close to 20 percent of its users have converted to premium services.
- read this Verge article
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