Spotify: Piracy May Surge Without a Freemium Option

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Spotify is generally considered to be a piracy killer. Thanks to the company's ad-supported free tier it guarantees a smooth transition from the dark corners of the Internet to a fully licensed service. However, Spotify is now warning that without its freemium option, piracy may surge once again.

cassetteWith the option to stream millions of tracks supported by an occasional ad, or free of ads for a small subscription fee, Spotify has proven to be a serious competitor to music piracy.

Since its first release in 2009 the service has conquered the hearts and minds of many music fans. Currently available in more than 60 countries, it is catering to dozens of millions of users.

In recent months, however, various prominent music industry insiders have called for an end to Spotify’s freemium option. With this move they hope that the company will increase its revenues and pay more compensation to artists and labels.

This is not a good idea, according to Sachin Dosh, Spotify’s Vice President of content and distribution. Killing the freemium model may result in more subscriptions but it may also boost piracy.

“We’ve done such a great job at Spotify of making piracy irrelevant, but that doesn’t mean it’s gone. It just means there’s no need for it right now,” Dosh told MBW.

“You could create that need again if you follow the wrong path,” he adds.

In recent years Spotify has caused a decline in music piracy rates in a few countries, something the company always envisioned it would. Having a free tier is an essential part of this chain.

According to Spotify’s exec the music industry realizes the risk of canceling the freemium option, which suggests that there are no concrete plans to change its model in the near future.

“…I think the industry does actually agree with a lot of this: instead of making free worse, the right answer is making premium better,” Dosh says.

Spotify’s comments on a piracy revival are in line with what we warned earlier. However, it is not the only threat. The recent push for more “exclusive” releases are another point of frustration for many music fans.

Various music services make deals to be the first to release new albums, such as Dr. Dre’s iTunes exclusive, making the piracy option relevant again for users of other paid services. This might not be a good strategy in the long run.

On that note, Spotify also has to be careful with privacy issues. A change to the company’s terms and conditions now allows it to access photos, phone numbers and sensory data from mobile users, which has quite a few users upset.

Now we don’t want these users, including Minecraft creator Markus Persson, to reconvert to pirates again, do we?

Update: Spotify responded to the privacy concerns here.


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