The label hopes that such a move would convert more free users into paid subscriptions, which cost $10 per month. CEO Lucian Grainge publicly stated his concerns with the freemium model last month, when he said, "Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors."
Other labels are coming to the conclusion that ad-supported free streaming services need to be adjusted, according to reports. Unnamed sources tell Rolling Stone that "most" labels are pushing for more limits on free music streaming. In addition to Universal, both the Sony Music and Warner Music CEOs have recently expressed doubts about free streaming.
The labels may seek to limit the amount of music users can listen to without paying up. Or they might hope to limit all free streaming to Pandora-like radio stations instead of on-demand music. Spotify and Rdio both allow for unlimited free on-demand streaming on computers, but limit mobile streaming to shuffled, radio-like services. Paid subscribers get full mobile streaming, offline access, higher quality, and no ads.
In the past, the labels were very supportive of free streaming — they saw it as a way to bring new customers (and money) into a declining industry. But as streaming grows and money continues to shift away from digital downloads and physical media, it seems the labels are becoming less comfortable.
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