Pondering Spotify

Each week in the RotD magazine, we run a comment piece, drawing inspiration from the top stories affecting the UK music industry. This week we look at Spotify and the media excitement surrounding its launch.

Reproduced from Record of the Day's Weekly Magazine. To Subscribe, go to recordoftheday.com

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Where the Spotify moniker sprung from we don’t know, but if one thing is for sure, spotting Spotify’s name in the vast array of media outlets, from Twitter to the Guardian, to Facebook and the NME, has been virtually unavoidable in the past couple of months. Given this week’s coverage: the turning over the Letters page in NME to discussion about the streaming service, and today’s Guardian, where each and every column on page 13 beamed Spotify’s praise, anyone would have thought that the £7m investment in the media’s favourite new toy had been entirely spent on the wizardry of a PR guru. One person wrote into the NME saying, “Anyone who says they didn't cry: "F*ck me, this is amazing!" when they booted up Spotify is lying.”

Spotify’s offering (for those who do not yet know: a two tier, ad-funded and paid-for on-demand streaming ‘jukebox’), while not being unique, is what those Silicon Valley types might deem a ‘killer app’. Its owners, two Swedish gentlemen called Daniel Ek and Martin Lorentzon, have been shrewd about the manner in which it was launched: for the past few months you could only get access through an invitation, therefore giving you membership to what appeared to be a private club. And there’s nothing the music and media industries like more than the feeling of belonging to a private club. Meanwhile, what better than a club that allows you to listen to (most) of your favourite songs and build collaborative playlists direct from your PC, for nothing!

Spotify isn’t the first company to offer such a service: We7, Qtrax in the US, Deezer in France and even Last.fm to some extent are still pushing on with their free streaming offerings. Even the vast array of online radio stations must be quaking in their boots right now, as might MySpace. What sets Spotify apart however, is how the media has fallen head over heels for it.

Naturally, with such backing, the news that Spotify had been ‘forced’ to remove content mere days before opening its UK service to the public at large (without the need for a ‘private’ invite), was bound to be met with howling criticism – at the labels, of course. In a statement the company said: “The changes are being made so that we implement all the proper restrictions that are required by our label deals. Some tracks will be restricted from play in certain countries, this means that if you share tracks with friends who are in other countries it’s possible that they won’t be able to listen to them.” We suspect that this was not a case of the major labels throwing their toys out of the pram (as we know they have a tendency to do on occasion). Rather, we suspect it was a technical glitch in that some tracks which hadn’t been cleared for worldwide usage had been given such freedom on the service. If one is tempted to apportion blame, doesn’t it seem most likely that Spotify had failed to implement clear and transparent licensing conditions? Sure, in a perfect world, the labels would have cleared all tracks for use the globe over, but for now, this simply isn’t the case and Spotify’s owners must have kicked themselves for not drawing such distinctions on the catalogue in the first place. We find it shocking that certain quarters of the national press had failed to do their research and pick up on this, proving once again that the music industry suffers at the hands of journalists who often seem simply unwilling to ask even the most basic of questions about the stories they cover. On the other hand, it was a PR master stroke, setting Spotify up as the good guy fighting the ire of the bad guy labels.

To maintain its newly-found status, the Spotify guys have been hard at work. On Friday it announced a deal with physical online retailer CD Baby. By Monday it added a further of 1600 albums (including Lily Allen's on the day of release). On Tuesday came the news it was opening up to the whole of the UK. Six thousand new releases were added on Wednesday (this is starting to sound like a Craig David song, isn’t it?), featuring a host of content from Universal Music India (perhaps an indication of where their efforts to build audience might turn to next) and today Spotify writes that it has signed a deal with the Alternative Distribution Alliance in the US to add another truckload of music. On Friday it chills apparently (sorry, couldn’t resist). Jokes aside, the timing of all these announcements is impeccable.

So, where’s the catch? As Chris Salmon in the Guardian enthused today, “The ad revenue ensures artists make some money out of your listening and that Spotify can continue to boggle music fans' minds with this amazing service.” The assuredness of his words: “The ad revenue ensures...” is a little presumptuous. Go speak to anyone dealing in online advertising and the scenario is not pretty. The payable rate on an average CPM (cost per thousand) delivery of banner ads for example is roughly 8p, according to some companies. You need to be hitting a serious number of page impressions to keep the money flowing in and who knows how many people are paying the 99p day rate for ad-free music on Spotify right now?

In 2004 I was given a year-long free subscription to Rhapsody – the US paid-for streaming and download service. It bowled me over and remains the best music service I have ever used. Then, they took it away and I was bereft. I switched over to Napster because it was the only other similar service available in the UK at the time. The free access lasted a few months, then they took it away and I was bereft, so I signed up for £15 a month. I’m willing to pay, but what is wonderful about the explosion of Spotify is that it will hopefully encourage the average UK customer to realise that there’s life beyond iTunes and there are genuine alternatives to illegal P2P.
Nicola Slade