Spotify is expanding its free ad-supported tier with unlimited access and song play to tracks on 15 personalized playlists. More free music, which is a direct threat to broadcast radio, will significantly grow the music industry overall, according to the streamer.
Throughout today's press announcement, Spotify worked to convince artists, labels and fans that a major expansion of its free tier would drive more music discovery, grow the music industry and eventually expand payments to creators.
For fans of free music the benefits of today's announcements are obvious.
A new mobile app, rolling out globally in the coming weeks, offers free access to 15 playlists including Discover Weekly, Release Radar and Daily Mix, along with Spotify curated playlists individualized to each user.
A new feature offers "assisted playlists" that will suggest songs to add to personal playlists based on each user's taste. A "Data Saver" setting could "save up to 75% of data usage" via predictive song caching and other new technologies, according to Spotify VP of Product Development Babar Zafar.
But for musicians and labels, an expanded Spotify free service which will return smaller per stream payments than on its Premium tier, is a much harder sell.
Spotify's expanded free service will have a "significant impact on the music industry in general," according to the sreamers chief R&D officer Gustav Söderström, who also echoed CEO Daniel Ek's recent pledge to enable "a million creative artists the opportunity to live off their art."
In fact, Spotify sees itself as the "R&D department for the entire music industry" as it grow a much larger music business "as big or bigger than social networks," according to Söderström, which measures its users in the billions.
Troy Carter Tries To Convert Non-Believers
A bigger user base is not necessarily synonymous with more money for artists, and Spotify Global Head of Creator Services Troy Carter was tasked with convincing a still skeptical creator community.
The core of Carter's pitch was that more users means more music discovery, but that many music fans can't pay $9.99 per month or the often lower local equivalent to use a premium service.
71% of #Spotify free and paid users are under 34 years old
71% of Spotify free and paid users are under 34 years old, according to Carter, implying that the average 20-34 year old can't pay $10 a month for music. By contrast, however, concert attendance is experiencing strong growth despite high ticket prices.
During a press Q & A that followed the presentation Carter added that "new thinking: was required that acknowledged that while a download or CD sale paid artists once, streaming pays out every time the song is played forever. But multiple analyses of recent payments to artists and labels show per stream payouts falling as the streamer grows, at least partially negating the gains of long tail payouts.