Spotify may soon allow users to use its music streaming service for free (with ads) on mobile devices like iPhone and iPad, according to a report from The Verge.
Currently, you need to buy a $9.99 premium subscription to access the service on mobile devices like the iPhone, iPad and iPod touch.
The Verge reports:
Spotify, the popular music subscription service, is due to meet in the coming weeks with its major counterparts in the record industry to renew their licensing agreements. The Verge has learned that managers at Spotify are expected to ask for substantial price breaks from the music labels as well as the rights to extend its free pricing tier to mobile devices.
The Stockholm-based Spotify has already started negotiations with Warner Music and will begin talks with Sony and Universal in the coming weeks, according to several music industry sources.
The report notes that according to their sources even though Spotify has over 20 million users worldwide and 5 million paying subscribers, it hasn’t been profitable as it has to give a huge chunk of the revenues (almost 70%) to record labels and ends up spending 20% on customer acquisition.
By allowing customers to use the service for free on mobile devices, Spotify is probably hoping that it will be able to convert a lot more customers into a paying subscriber.
It has also been rumored that Apple is working on its own music streaming service, so it will be important for Spotify to get substantial price breaks from music labels and offer the service for free on mobile devices if it wants to compete with cash-rich players like Apple.
Via: The Verge