SPOTIFY: 'The model is working'

Spotify has dismissed rumours that it is planning on closing its free music streaming tier, telling Music Business Worldwide that the story is "totally false."

A report in Digital Music News last week claimed that Spotify was considering cutting off its free, ad-supported music streaming tier. Instead, the report said, Spotify was planning on limiting users to just three months of streaming before forcing them onto paid tiers.

But Spotify has denied that it's planning on killing off its free streaming, saying in an e-mailed statement: "It's totally false. The model is working."

The original Digital Music News story claimed record labels such as Universal Music Group and Sony Music Entertainment were unhappy with Spotify's free tier, feeling that it wasn't doing a good enough job of moving users onto paid tiers. Apple is reportedly pressuring music labels to ask Spotify to drop its free tier in preparation for its own music streaming service, which is expected to launch next month.

A source at an unnamed major music label told Rolling Stone in March that "we need to accelerate the growth of paying subscribers - that's a slightly more positive way of saying we need to limit free." They went on to suggest some ways that streaming sites could go about that: "You can make the subscription service more attractive, with high-resolution sound or exclusive albums, or you can make the free version worse, by limiting the amount of stuff you can listen to."

Spotify is set to hold an important press conference on Wednesday, where it's expected to announce a new video streaming feature. The Wall Street Journal reported earlier this month that Spotify has been in talks with companies that create and share videos for YouTube to also create material for an upcoming video streaming service of its own.