Spotify, Universal Butt Heads in Freemium vs. Paid Streaming Debate

With the impending arrival of Beats Music's relaunch as a streaming service, the entire industry is in a tizzy and nobody can agree on how users should pay for their streaming music. In the ongoing contract negotiations between Spotify and Universal, Spotify is sticking to its guns and pushing the freemium, ad-paid model, while Universal wants to go in the direction of listeners having to be paid subscribers.

It was reported yesterday (May 15) that Spotify caved and agreed to offer three free months of streaming before mandating that their listeners subscribe in order to maintain access, but sources later confirmed that there was no truth behind the report.

Spotify's argument is that free access lures listeners in, but the labels attest that the current model isn't profitable enough: Ad-supported streaming makes up 75 percent of Spotify's monthly users, but only 10 percent of its revenue.

Apple's recent nudging hasn't exactly helped Spotify, as they've been trying to convince labels to not renew their streaming licenses with Spotify and other services, and their Beats Music relaunch model is a lot like the aforementioned plan that Spotify turned down.

Regardless of who is right and who is wrong, it's important to remember that Billy Corgan thinks they're all idiots.