Spotify will always retain a free music streaming tier to complement its paid offerings, said company executive Troy Carter at a business symposium. Other bigwigs from the music streaming service reiterated that Spotify will not engage in the signing of exclusives with artists for new music, unlike its biggest on-demand competitor, Apple Music.
It looks as if there's a widening differentiation in the strategies of the two biggest on-demand streaming music services. While Spotify has two distinct listening tiers, one free and advertiser supported and one paid and ad free, Apple Music only has a paid listening version.
While Apple Music has aggressively courted exclusive deals with artists to stream their new music for a predetermined window, Spotify has rejected the concept of exclusives, has not engaged in the practice and does not intend to.
Spotify clarified its direction at The Wall Street Journal's WSJ.D Live conference in Laguna Beach, California. Carter, the recently hired global head of creator services for the streamer and former music manager to pop stars such as Lady Gaga and Meghan Trainor, said the free tier is here to stay and not just a vehicle for the company to convert initial free subscribers to paying customers. He analogized the company's offerings to those of a concert, in which some fans can afford high-priced VIP seating whereas others can only pay enough for nosebleed seats.
"I don't think we're ever going to get to a world where everybody on the planet is going to pay for music," said Carter. A free tier listener "may never convert to a paid subscriber ... but they'll be able to afford a concert ticket, they'll be able to afford a t-shirt."
The company's other executive speaking at the conference, Chief Strategy and Chief Content Officer Stefan Blom, reiterated Carter's statements that Spotify is committed to its free tier and added that it is making the company money due to revenue derived from the advertisements that support it despite the lack of paying customers.
Carter and Blom also stated that while Spotify is committed to offering more original content, the company will stick to its guns and not sign any new music exclusives with artists.
"We don't believe that it is good for the artist," said Blom. "We are not partaking in that game."
Apple Music, on the other hand, continues to pursue such deals with fervor, as company executive Jimmy Iovine recently promised. When big players Pandora and iHeartRadio join the on-demand streaming fray shortly, it will be interesting to see where their position falls on the issue of exclusives.