updated 05:32 pm EST, Wed February 20, 2013
Talks with Warner Music already ongoing
Managers at Spotify are scheduled to meet with record industry representatives during the next few weeks, and are hoping for some changes when it comes to renewing license agreements, say music industry sources contacted by The Verge. In particular the streaming service is shooting for some price breaks, and also rights to extend free pricing to mobile devices. While Spotify apps are available for a number of phones and tablets, use of them currently requires a paid subscription after a 30-day trial.
Spotify has allegedly already started talks with Warner Music, and should meet with people from Sony and Universal in the near future. The sources suggest that Spotify urgently needs a deal; some 70 percent of the service's revenues are said to pay for music licensing fees, while another 20 percent covers customer acquisition. That leaves just 10 percent for everything else, effectively negating any profit.
Making the free tier available on mobile would likely help expand Spotfy's subscriber base by making it more useful and pulling in people who don't care as much about PC and Mac support. It could also directly improve revenue, since it would expand the market for the advertising that the free tier is saddled with. The sources add that in some markets Spotify is close to converting 20 percent of free users to paid ones.