$14bn Spotify Acquisition on the Horizon?
- Thursday, March 26th, 2015
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Spotify is preparing to announce it has been acquired for upwards of $14bn (£9.4bn) next week, with signatures and final approvals exceptionally close according to a source familiar with the deal.
The acquisition, reported by Digital Music News, could represent a significant shift in Spotifys business model and relationship with major recording labels, with the CEOs of both Sony Music Entertainment and Universal Music Group placing the service under heavy pressure to eliminate its free access tier.
The shift in philosophy will come as part of a three-way deal with representatives of major music labels and YouTube and its various music properties, and may result in YouTube removing its free music videos at the same time as Spotify closes its free streaming service.
The move will represent a unilateral shift away from the free streaming culture which has grown over the past decade, and force millions of Spotify and YouTube listeners to either pay subscriptions or search elsewhere for free music.
If the deal goes through as reported, it could net Spotify millions in new subscriber revenue, but may also be a boon for rival services that still offer free streaming as users flee to avoid high charges, or even usher in another period of heavy music piracy as was seen around the turn of the millennium.
However, there are also reports that the Recording Industry Association of America, who deal with curbing music piracy, is preparing to announce a deal with Russia that will see 99 per cent of illegal torrent and mp3 download sites hosted in the country closed, as well as renewed efforts by the US Department of Homeland Security at stamping out access to illegal music sites within the US.
Overall, if even one of the reported deals is accurate, next week could prove a highly divisive one for fans of streaming music on the internet.