Is Spotify thinking about shutting down its ad-funded “free” tier?

One of the major reasons Spotify is the biggest of all the music streamers is that it’s possible to listen for free in exchange for having to listen to a certain number of ads per hour. No subscription required. This is great for market share growth but not so great for rightsholders. The payouts from the “freemium” tier are lower than those from subs.

Rob Stringer, the chairman of Sony Music, isn’t a fan, saying that freemium tiers aren’t proper monetization for music and says that users of a “free” tier should have to pay a “modest” fee. That wouldn’t make it free, then, would it?

He’s not the only one, too. Goldman Sachs wants streamers (read: Spotify) to “improve the monetization of ad-supported users.” Why? To force freemium users to convert into paid subscribers.

How? Maybe a fee for everyone. Maybe a fee just for North America users. Or maybe a total shutdown of the “free” model in North America and Europe.

Music Business Worldwide digs into the issue, looking at several scenarios. It’s worth reading.