Streaming music has a new set of growing pains on its hands as the industry tries to find a sustainable equilibrium between the rights holders and Spotify. Revenue streams for many labels have dramatically shrunk since music entered the digital age and streaming profits — although substantial — are far inferior to what physical sales generated in the past. The same companies that supported streaming music in its infancy, including Universal Music Group, are now beginning to question the “freemium” model.

Apple-owned Beats is already a subscription-only platform and Spotify may be the next service to limit its free streaming. The Financial Times reports that Universal is currently in negotiations with Spotify to more strictly limit their free streaming service. The hope is that with limited free streams users would be more apt to take advantage of the $10 subscription. Although the move may seem like it is being unfairly levied against consumers, CEO Lucian Grainge stated his concerns about the freemium model last month; “Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors.”

Details on how this will affect consumers are still unknown, but some speculate that labels may limit free on-demand music or replace it with a Pandora-like service entirely.

Via: The Verge

Tags: spotify

Categories: News