MIDEMNet Blog: The Spotify Effect

The following appears courtesy of MIDEMNet’s Blogs. See all of Ted Cohen’s blogs for MIDEMNet at MIDEM.com.

June 5, 2009

At every digital media event, anywhere that digital music is discussed, virtually everywhere that I’ve been in the last three months, the first question that seems to come up, “what do you think of Spotify?” It breaks out into two categories, those who use it and love it, and those who have only heard about it and just want to touch it.

In Ibiza last week, during panel that I was moderating, the Spotify love fest broke out early in the session, and this was a dance music conference!

The concept of the Celestial Jukebox has been discussed for the past dozen years, viewed by most as the holy grail of music; Spotify is not the first implementation of the dream. RealNetworks’ Rhapsody and Napster, now owned by Best Buy, were both early music service pioneers. iMeem, MySpace Music and others have been offering ad-supported music services for some time. To be frank, I have been a huge fan of Rhapsody since its inception. It completely changed my mind as to what was the future of the music business. I began to speak publicly about the advantages of subscription over a la carte models:

•    Flat fee access
•    No $0.99 barrier to music discovery
•    A lean-back/personal experience

Additionally, subscription provides the entire music industry, labels, publishers, artists and songwriters, with something it never had before, a recurring revenue stream from music fans. This makes it a true game changer.

In April 2006, just one month before I left EMI, I gave a talk in Hong Kong for Nokia where I stated that the days of music as a product were over, we were now entering the era of music as a service. Within an hour of my talk, I got an animated phone call from EMI HQ in London asking, “You said what??” It seems that a Philippines news service had covered the event and ran my statement, minutes later landing as a Google alert on Wrights Lane. I stood by the comment then and believe it even more today.

To be clear, Spotify is very impressive. It provides, at your fingertips, one of the largest libraries of digital music available to date, brought to you free of charge, with minimal advertising. There is also a paid upgrade available to Spotify Premium – this is a very critical feature.

In multiple forums, both public & private, the question is frequently posed, ‘if you’re giving unlimited access to music for free, what’s the upsell?’ Additionally, when Spotify provides the currently-rumored mobility, the game changes significantly, removing the last major argument against music services, “I can’t take it with me.”

But, what’s the ‘big deal’ about Spotify? Well, a few things:

•    First, it’s free. – This sets it apart from the standard services from Napster and Rhapsody. While they both have offered some free features, the core offerings involve a monthly fee.
•    It’s very simple to use. – The interface is clean, you don’t need an FAQ to navigate it.
•    It plays fast. – You click on a song and it virtually starts instantly. There is no annoying buffering
•    The library is extremely complete. – While Spotify doesn’t have the ‘gray’ music, live, bootlegs, etc., that unlicensed entities such as Limewire offer, the depth of catalogue is amazing.
•    It didn’t come from Apple! – This is the really big news. This is the first mass market adoption of a commercial digital endeavor that wasn’t delivered from Cupertino.

Whether it is the iPod, iTunes or the iPhone, consumers incorrectly assume Apple was first, ignoring the ground-breaking work from the Rio player, LiquidAudio and Palm. I personally wish that history will ultimately kinder to these digital pioneers.

With the licensing of Spotify, along with Nokia’s Comes With Music mobile initiative, the music industry is finally acknowledging the inevitable. That consumers are now both empowered and entitled. They want it all, and not at $0.99 a bite.

I can’t wait until Spotify is available in the U.S. Until then, we are a 3rd world nation!


Posted by Ted • Friday, June 5, 2009 .