Sony Entertainment Chief Says Windowing Is Coming to Streaming Services, Spotify Responds in Kind

Michael Lynton, chairman and CEO of Sony Corporation of America and Sony Pictures Entertainment

Michael Lynton says subscribers will get a head start on music before its released to free services.

Subscribers are eventually going to get access to new music before free listeners, Sony Entertainment CEO Michael Lynton said Thursday at the Code/Media conference.

“Going forward, you will see some version of windowing in the music industry,” Lynton said, adding, "[t]he kind of a service that we would like to see, going forward, is a subscription service.” Just as movies are released in theaters and on-demand at different times, "you're going to be able to hear the music first in a subscription service and then later in a free service," he said.

But the switch won't happen immediately. Lynton believes the switch to windowing won't happen until subscriber counts are "many-fold bigger" that today.

Without naming it, his comments seemed to be directed at Spotify, which offers both free and paid services, rather than YouTube, which also offers free and paid tiers, and non-interactive services like Pandora that can legally stream any commercially released song.

Spotify spoke out against exclusives the same day Lynton made his comments. "Artists want as many fans as possible to hear their music, and fans want to be able to hear whatever they’re excited about or interested in -- exclusives get in the way of that for both sides," Jonathan Prince, Spotify's global head of communications, told The Verge. "Of course, we understand that short promotional exclusives are common and we don't have an absolute policy against them, but we definitely think the best practice for everybody is wide release."

A windowing strategy would draw a clearer line between pay-only services like Apple Music, Rhapsody and Tidal and "freemium" services like Spotify that offer free, ad-supported listening while encouraging people to upgrade to the paid service. Labels have thrown their weight behind paid services and have expressed displeasure about the rate at which pushed Spotify converts free listeners into paying customers.

But Lynton made an important implication. The employment of a windowing strategy suggests freemium services, frequently attacked by artists for undermining the value of their music, will remain on the market. Although labels are eager for more subscribers, Spotify is large enough to protect its business model. Freemium services may have to acquiesce to labels' demands for windowing, but their two-tiered models can remain intact.

Freemium services could continue to face a more sinister type of windowing strategy, however. Recent releases by Kanye West and Drake were made available exclusively to Tidal and Apple Music, respectively. West has an ownership stake in Tidal, a subscription service that frequently gets exclusive material from other artist-owners such as Rihanna. Drake, who endorsed Apple Music for its launch in June, gives the service a one-week exclusive on his material.