Spotify Softens Stance on Windowing New Music In Exchange For Lower Royalty Rates: Report

 The Spotify logo is displayed on the screen of a smartphone
Thomas Trutschel/Photothek via Getty Images

 The Spotify logo is displayed on the screen of a smartphone on Jan. 21, 2016 in Berlin.

Spotify may be finally softening its stance on windowing. According to the Financial Times, the music streaming service is nearing new deals with major labels that would allow artists to restrict new music to paid subscribers only for a short window of time.

The concession, which Spotify has long resisted, would reportedly be in exchange for the labels agreeing to reduced royalty fees for songs. The proposed deals are seen as a crucial step as Spotify tries to clear the path for an IPO in 2018.

Spotify declined to comment on the FT report, which states that the deals with Sony Music, Universal Music Group and Warner Music Group could be completed within weeks. The streaming service has been operating on month-to-month deals for some time now.

Spotify's position has always been that a wide release to both its ad-supported and paid tiers is the best way to reach fans with new music. Other major streaming services, including Apple Music, Amazon and Tidal, do not encounter the same issue as they don't offer a "freemium" option. By adopting windowing for big releases, Spotify would be adding a major incentive for free users to upgrade -- though it could also send listeners elsewhere, like YouTube, which has an ad-supported tier as well, or back to piracy.

Taylor Swift famously removed her entire catalog from Spotify in November 2014, partly because it refused to restrict her 1989 album to paid users, and several artists including Jason Aldean, Coldplay and The 1975 have held new releases from Spotify for varying periods of time as well.

Spotify recently announced a major milestone: 50 million paid subscribers, an increase of 10 million since September. It's far and away the market leader in terms of music streaming subscribers; Apple Music is second with more than 20 million subscribers, announced in December.


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