Spotify, despite the critics, is doubling down on its commitment to free music. In its first major move since going public earlier this month, the music-streaming company Tuesday unveiled a new version of its mobile app that unlocks certain premium features for free users. Previously, users on the free, advertisement-supported tier could only listen to songs on shuffle on the mobile app. Now, they can listen on demand to about 750 songs that appear across Spotify's 15 personalized discovery playlists, which include Discover Weekly, Daily Mix and Today's Top Hits. The company said it negotiated new deals with record labels to be able to offer these tracks for free.
At a press event in New York's Gramercy Theater announcing the new feature among a handful of other tweaks, chief R&D officer Gustav Söderström said the company is trying to do for the music industry what broadcast radio did in the 1990s: motivate people to buy music by first giving it away for free.
Spotify's 90 million free users will be pleased – but others, less so. Apple Music's Jimmy Iovine, for one, has voiced skepticism for years about giving away music for free, recently calling it a "massive problem" for streaming services. And the music industry at large is reluctant to embrace Spotify's optimistic vision for the record business. While the company stands behind the promise that many of its free users will eventually convert into paying subscribers on the premium tier, artists and record labels are less sure; moreover, they worry that the meager royalty payouts from free music are impeding the industry’s rocky recovery.
But it was streaming, and Spotify in particular, that led to that recovery in the first place. Thanks to the boom of streaming in recent years, music is finally coming out of its two-decade slump. The United States posted music revenue of $8.7 billion last year – a 17% year-over-year increase that took the industry back up to its 2008 levels.
Spotify, whose first earnings report as a public company is slated for May 2nd, is now starting to dream bigger than being a mere music delivery platform. Its other announcements today included an improved system of mobile data usage, deeper user personalization and a so-called "self-driving playlist" feature that will automatically add songs to playlists based on the music users have already inputted. "We want to be the R&D department for the entire music industry," Söderström told the crowd. "We don't think the industry has ever had an R&D department before. And we're it."