Spotify finds more partners to inflate its subscription rates

First Spotify partnered with Sony, putting the streaming service on Playstations. They also partnered with Uber. Now, Spotify is doing the same with Starbucks, although as usual very few journalists are bothering to read between the lines as to what all this partnership means, so let me help you along.

Spotify, as everyone knows, is a streaming service that pays a pittance to musicians. One that pays more to major record labels (many of whom are investors in Spotify) than it does to artists on Independent labels.

What you may not know is that it appears Spotify is also on the verge of becoming monopoly. According to Spotify's own Will Page, director of economics, the company represents half of the $1.5 Billion global subscription streaming market. That's right. 50%. Interesting news, considering the fact the European Commission ironically is going after Apple for allegedly working with music labels to use their influence on streaming services to end their free tier because of Apple's perceived unfair competitive advantage.
The European Commission seems to be doing this based on speculation only. The in-depth New York Post article examining this story is so lacking in merit it doesn't even name one single source.

Whether the allegations are true or not is largely irrelevant. Spotify is still not making money. In fact, it has tripled its losses. The only thing it can do, short of lowering its royalty rates farther, and bringing out the musician militia is increase its ad revenue.
If Apple really is engaging with record labels to end the free tier, Spotify would have to make up for the number of freeloaders, because they are still subscribers and the number of subscribers equals greater ad revenue. Even if Apple isn't, (and I doubt it is) Spotify is desperate to get people off the Freeloading truck. Hence the partnerships.

While the Playstation deal includes the freeloader tier, it is an exclusive deal. And when two partners "decline to comment" on the financial terms of of the deal, you know its substantial. As for Uber, well that new partnership is connected to drivers who have premium subscriptions. For those who don't, it's cool, Spotify will give you a week free. Why bother? For the same reason magazines give two years for the price of one and why Lexus was accused of dumping its cars at below market prices, or why Ford kept dumping the Taurus into rental fleets: it's all about the numbers.

The news that Spotify is partnering with Starbucks, according to Mashable, comes with a free perk for all Starbucks employees. You guessed it: A Spotify Premium subscription. Now, does that include all employees, or just ones behind the counter? If it's all employees we're talking close to 200,000 employees. That's close to 1.5% of Spotify's entire 15 million paying subscribers. Not a bad bump from the dump.
As for Starbucks? Partnering with Spotify seems like a lot safer move than talking about race.

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Free Willie's picture

I can't stand Spotify The ads are always at leat 65% louder than anything else.