Adele and Taylor Swift prompt Spotify to rethink free music stance

Sources say streaming service is preparing to bow to artist pressure and relax its policy that every song should be free

The global seven million sales of Adele’s 25 is partly ascribed to her decision to withhold the record from Spotify (Getty Images)

Spotify is prepared to let artists including Adele and Coldplay make their music available to premium subscribers only, in a relaxation of its policy that every song should be available free to listeners, according to industry sources.

Since its 2008 launch, the streaming service has insisted that listeners should be able to access its catalogue of millions of songs for free, subject to the intrusion of adverts.

The company argues that its “freemium” offering drives music fans away from pirate sites and acts as an incentive for them to upgrade to its £9.99 a-month ad-free Premium offering.

Although Spotify now has more than 20m subscribers, big names including Adele and Taylor Swift have withheld new releases from the service. Swift refused to put her 1989 album on Spotify because the company refused to restrict access to paying subscribers only.

The seven million global sales of Adele’s 25 album during its opening fortnight is partly ascribed to her decision to withhold the record from Spotify, incentivising fans to buy the CD or full-price download.

Now Spotify is believed to be ready to bow to the wishes of artists and record companies by restricting the biggest new releases to subscribers only. A report in the Wall Street Journal said: “The company is initially trying the new approach as a test, according to a person familiar with the matter.

“It wants to investigate how such a ‘windowed’ approach might affect usage and subscription sign-ups but hasn’t decided which artist will first get to withhold music from the free service, this person added, and the company isn’t ready to announce a permanent policy change.”

Spotify shifted its position during discussions with Coldplay over its new album A Head Full of Dreams, which was released last week on iTunes, Apple Music and Jay-Z’s new streaming subscription rival Tidal.

Spotify was willing to restrict the record to its paid version and keep it off the freemium tier for a period of time, according to those close to the negotiations.

The discussions suggested that artists could be split into “first class” - big sellers with the muscle to call their own shots – and second rank performers who would live on the free and paid tier.

“They were staring down the barrel of having the third big record in a row not on Spotify,” one record company executive was quoted as saying.

However the agreement eventually struck meant that the Coldplay album, initially withheld from Spotify for a week and which is selling ahead of projections, will debut on the paid and free tiers from this Friday.

Publicly, Spotify is sticking to its established policy. Jonathan Prince, Spotify's Global Head of Communications and Public Policy, said: “We are 100 percent committed to our model because we believe that a free, ad-supported tier combined with a more robust premium tier is the best way to deliver music to fans, create value for artists and songwriters, and grow the industry.

“In that context, we explored a wide range of promotional options for the new Coldplay album and ultimately decided, together with management, that Coldplay and its fans would best be served with the full album on both free and premium this Friday.”

Subscription music streams earn a higher royalty rate for artists like Swift who believe it’s wrong to give their music away for free. Premium subscribers accounted for 91% of Spotify’s revenue but the rate of subscription sign-ups is believed to have slowed, raising concerns among record executives who gambled on streaming being the future for the struggling industry.

However Ed Sheeran, Spotify’s most streamed artist of 2015 with 59m plays, says the service helps promote his main business, which is playing live. Sheeran has earned around £15m from 3 billion Spotify plays without harming his album sales.

The major labels Universal, Sony and Warner are shareholders in Spotify but are also among those agitating to relax the freemium tier. Record companies are increasingly turning their attention to YouTube, which pays an inferior royalties rate to Spotify for billions of free video plays. Thom Yorke compared the Google-owned platform’s music policy to Nazi art theft during the Second World War.