Spotify Drops Desktop Streaming Limits--a Pricing Precedent?
BY Jill Krasny
In a move that seems to take aim at Beats Music, the Swedish startup is letting non-paying subscribers listen to as many songs as they want.
For a long time, it was impossible to stream music for free on Spotify's desktop service without being subject to time restrictions. But with the ever-tightening competition in the music-streaming business--including the launch of Beats Music, the new subscription service created by Jimmy Iovine and Dr. Dre, on January 21st--it seems Spotify is changing its tune.
On Thursday morning, the Sweden-based startup announced it was dropping those restrictions, which included a cap on how many songs non-paying subscribers could stream and a six-month limit on unlimited listening. "You can listen to your favorite songs as many times as you like, for as long as you want," Spotify wrote on its blog. You'll still have to listen to pesky ads, though.
Spotify's move could influence pricing strategy throughout the crowded music-streaming space. TechCrunch called the pricing change "a big scalability milestone." The startup is making it easier for non-users to get on board with the service in the hopes of converting them into paid subscribers, as well as positioning itself against Pandora, which dropped its listening cap in 2011. Just last month, Spotify changed its pricing for mobile users, allowing anyone to stream radio stations for free.
Scalability is a huge goal this year for Spotify, which raised $250 million in November, in what David Pakman, a venture capitalist and the former CEO of eMusic, called a flat round, or sign that the company's growth had stagnated.
"Spotify's issue is they need to scale that business, and they're really far from reaching critical mass," Matt Pincus, founder and chief executive of Songs Publishing, a music publishing firm, told Inc. Currently, the company has 26 million users and 6 million subscribers, which he says isn't enough. "The number that everyone is talking about is 50 million [users]."