Spotify has announced a new deal with Universal Music Group that is likely to displease some of the free users of the service. Speculation has been ongoing that Spotify might need to change up some of its services to be able to successfully proceed with its IPO plans and as of today, it seems the company is one step closer to doing this. According to the information coming through, the new long-term deal with Universal Music Group comes with a significant disadvantage for a large portion of Spotify's user base, in relation to the exclusivity of new album releases.
Until now, whenever a new album was released on the platform, it was instantly available to all users, both free and premium subscribers, with the new deal this is set to change. Now, with all new Universal Music album releases, artists will have the option of either allowing all users to access their music instantly or making the album an exclusive to Spotify Premium users for a limited time, with the maximum being two weeks. Aside from this, the deal will also provide the label with user data, giving them tools that will allow them to better cater to listeners' tastes. There are two important things to note for users. First of all, while albums can be exclusives, singles will remain free for all. Secondly, it seems likely that Sony and Warner Music will sign similar deals, meaning within a matter of months the majority of Spotify's artists will likely have the exclusivity option.
The deal does have some expectations on Spotify's part, though. It's understood that Universal has agreed to a lower share of revenue in exchange for a specific subscriber growth. If Spotify fails to meet the targets, it appears the streaming service will be forced to pay Universal a higher share. If Sony and Warner Music do sign similar deals, it would appear that Spotify will be more on track to realizing its IPO plans which are now set for 2018. In terms of its subscribers, it'll remain to be seen how the deal affects the company's numbers, but with the possibility of music exclusives, this may be the push some users need to switch over to the premium service.