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Spotify may limit free streaming to 3 months, as Apple piles pressure on music labels [Update]

This summer, Apple is expected to launch its new music streaming service, built on the back of its Beats Music acquisition last year. But as recent reports have indicated, Apple isn't exactly thrilled at the prospect of trying to convince customers to pay for a music subscription while free music streaming services like Spotify give people a reason to look elsewhere.

Apple has apparently been pressuring the major music labels to withdraw - or at least reduce - their support for services like Spotify, and it seems that the labels may be coming around to Apple's way of thinking.

Digital Music News reports, via 'multiple' unnamed sources, that Spotify may be preparing to restrict its unlimited music streaming offering. Currently, Spotify users can enjoy as much free music as they like, indefinitely, with ads periodically interrupting playback to generate the revenue that helps to support the service.

But under a proposal said to have been put forward by Universal Music Group and Sony Music, existing Spotify users would be allowed to continue using the service without limits for only a further six months, while new users would be restricted to even less: just three months of unlimited, ad-supported music streaming.

75% of Spotify users pay nothing to use the service

Unsurprisingly, Spotify is said to prefer keeping things as they are, but the music labels are already less than keen on the company's business model, which is based on the notion that its free service makes it easier to 'upsell' paid subscriptions to existing customers. However, so far, only a quarter of Spotify's 60 million users pay for subscriptions, and that's not quite enough to give it the clout it needs to be able to dictate terms.

Apple, on the other hand, has a great deal more influence over the music industry, thanks in no small part to its huge success with the iTunes platform, and if recent reports are accurate, it appears to be using that power to bring changes that will impact upon the wider digital music market.

Unsurprisingly, as Bloomberg reported last week, the US Federal Trade Commission is already considering the antitrust implications of these actions, and may pursue a formal investigation into whether or not Apple has been using its dominant position to disadvantage its rivals.

Source: Digital Music News via BGR

Update: Spotify says that these 'multiple sources' are flat-out wrong about plans to reduce the amount of free music streaming, and in a terse statement to TNW, a spokesperson for the company said: "It's totally false. The model is working."

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