21 ms·

Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty wel

by _zachs 9y ago

Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them. I wouldn't be surprised if Spotify tried poaching higher-level strategy people from Netflix.

graphitezepp 9y ago
I doubt the need to poach the people, just the strategy itself. Would likely be better to find people used to managing bands, or doing whichever relevant recording company position, at a high level I would suspect
simias 9y ago
I'm not convinced. You don't consume music the way you consume TV shows and movies, it's often a more "passive" activity where you start a playlist in the background while you do other things. You can do that with movie/TV shows of course but a movie will last you ~two hours while a TV show can literally last you days or weeks at a time without input if you really like having The Office in the background while you do other things. Assuming that you can afford buying subscriptions to various services it's not massively annoying to have to use HBO Go to watch Westworld and Netflix to watch Arrested Development. It's not as good as having a unified service but it does the job. If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. When I hear a song out there and I want to add it to my playlist I expect that it will be available on Spotify and the vast majority of the time I'm right. If I need to go hunt for songs on various services and I can't easily make a single unified playlist with all of it I think it'll be back to piracy for me, it won't be less convenient and it'll be much cheaper.
- gehsty 9y ago
  I think Spotify's model would need to be slightly different to Netflix, I think they would still need to allow their artists music onto other platforms. The need for them to be a record label is not for exclusivity, it is so they can operate as an equal partner. At the moment their entire business is based on negotiating deals with record labels, all Spotify can offer is revenue, so they will be squeezed and squeezed as each contract is negotiated and renegotiated. Every artist that signs up to them will save them this cost in the long run... So I'm sure there'll be seemingly crazy deals like comedians have been striking with Netflix, which in the long run are will be very beneficial to Spotify.
  - lambda_lover 9y ago
    Interesting thought. I've been very anti Spotify-as-a-label, but this is a really neat way of looking at it that I hadn't considered before. What if Spotify becomes a (small) label that's very artist-friendly? Then they can offer non-streaming distribution of their artists as a bargaining chip for existing labels. My only issue here is that I'm not sure if existing labels will begrudge a new competitor on the block (and then try to kill Spotify). It doesn't seem to me like Spotify being a fellow label gives them much more that the existing labels would want, but maybe I'm just not thinking of it. According to my memory and a little research [1], the record labels have some stock stake in Spotify. Personally I think this is Spotify's best bet: if the labels can derive stock gains from helping Spotify (plus licensing fees), they have skin in the game so they won't try to sabotage Spotify. I'm of the opinion that instead of trying to produce music (and fight the record labels), Spotify is better off getting into a complimentary position: make it easier for fans to find out about concert, purchase tickets at fair prices, and buy t-shirts. All stuff that Spotify can probably do better than the record labels, and which won't cut into label profits. [1] http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-spotify http://www.swedishwire.com/jobs/680-record-labels-part-owner...
- lev99 9y ago
  > If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. I have this problem with Spotify. About 80% of the music I like is on Spotify. Private label, soundcloud, older forgotten bands, and foreign music is often missing.
- styfle 9y ago
  One thing that stands out to me that differentiates Netflix vs Spotify is what happens when a license expires and content gets removed. With Netflix, my reaction depends on if I watched the content before it was removed. With Spotify, it's almost always rage. Why? I often listen to music more than once but I often don't watch movies more than once.
FreakyT 9y ago
It would definitely be a good direciton to go in, but I suspect a major potential problem for Spotify will be the possibility that the major record labels pull their tracks off Spotify in retaliation. This was less of an issue for Netflix as Netflix streaming already had an extremely limited selection of third-party licensed content.
- TheGRS 9y ago
  IIRC the original content was in response, not in spite of 3rd party content pulling out of Netflix.
andromedaworld 9y ago
The problem with this approach is that there's so much music out there because it is way cheaper to make music than it is to make films and shows. Even if spotify was somehow able to sign the top artists, they just couldn't keep up with the influx of new artists coming up every single day. Music lovers also tend to be very particular and nuanced about their taste in music. Therefore, if I as a consumer don't find my music on spotify it means I'd have no reason to subscribe nor come back to spotify.
- decacorn 9y ago
  same could be said about movies and tv shows. and netflix had no problem exploiting a market opportunity (produce actual quality content unlike the plethora of vapid crap currently pumped out on the mainstream media networks). so not hard to believe spotify can take the same approach. whether they can be successful is the big question.
- mfoy_ 9y ago
  Also I can listen to the same album over and over for hours on end, but once I've watched a TV series or movie I am unlikely to revisit it again for a decade. So exclusive TV/movie content has a "novelty appeal" that music doesn't.
- epicide 9y ago
  I think we might be seeing a shift in how people consume music that Spotify is (better?) positioned to take advantage of. First and foremost, I agree that Spotify will struggle if they try to compete with other services on providing all artists. It seems like listeners (or perhaps a subset) are listening by genre rather than by artist. I know genres and waves of music are nothing new, but with the lower barriers to creation as well as to consumption [1], we are seeing the number and frequency of new genres and sub-genres increase dramatically. Anecdotally, I find myself using radio based music a lot more. E.g. I have a Synthwave station on SoundCloud that I listen to. I think this style is further exemplified with the popularity of sharing Spotify playlists. This is also why I think Spotify in particular are ahead -- the very people who would listen to Spotify published content are the people that already use Spotify. In fact, I think this style better fits a lot of people who would use a streaming service in the first place. A lot of the people who want to listen to their favorite artists question the idea of paying for a subscription to maintain access to their favorite albums. Of course, if Spotify goes this route, they are not alone. They would have to compete with services like SoundCloud and BandCamp. I think they could find success by toeing the line between major label content and indie content. [1]: e.g. a "bedroom musician" can make their album over the course of a few weeks and then that album gets bought and listened to by someone thousands of miles away within minutes/hours of release. No printing copies, shipping, stocking, ticket purchasing, etc.
wilsonnb 9y ago
Starting their own label is biting the hand that feeds them, though. They need the libraries that the major labels have in order to stay in business. Perhaps when they're not competing as heavily with Apple and to a lesser extent Google they could start their own label and the major labels would just have to deal with it, but I don't think it's a realistic course of action until then.
redorb 9y ago
I don't feel we're at the point of saying 'it's turning out well' for Netflix. For sure on the awards side of things and quality shows etc... but haven't they raised billions upon billions in debt to make these shows? Their execution on doing their own content has been great. However the long term value of these movies / shows still has to prove out in profits at some point.
- psergeant 9y ago
  I’ve never heard anyone talk about Hulu and Chill
bogomipz 9y ago
>"Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them." This seems to be a common refrain that Spotify can just "pull a Netflix." And this is very unlikely. Firstly no matter how much opriginal content they could create, if they don't have back catalog it's going to be a total non-starter for the mainstream. A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. Also music and movies occupy very different spaces in peoples lives - emotionally, socially, where and how they're consumed and shared etc. People need music for their commute, for their workouts, for their parties, at bars and for their workdays. People only need movies when they're home or maybe stuck on an airplane. Lastly Spotify needs to stay in the record label's good graces. If they were ever to be viewed as a competitor or a thread to any the big 3 record labels it would be reflected in punitive price increase when it came time to renegotiate their licensing deals.
- sailfast 9y ago
  How many shares do we think it would take to purchase a major record label at this point? What about a perpetual license to their content (since buying a label could be seen as anti-competitive)? This would certainly help avoid some of the down-side risk to the business. That said, their IPO didn't exactly help the company clear the working capital they'd need to do this.
  - subpixel 9y ago
    Not only are there numerous labels with "must have" back catalogs, they now all know exactly how much money Spotify has.
  - bogomipz 9y ago
    Well there's no such things a "major record label" anymore. When people say "the Big 3" each of those three is global conglomerate. The result of years and years of consolidation. Using the smallest of these 3 Time Warner Music Group, the company did $2.87 billion in revenue in 2013[1]. Let's say that Warner was actually interested in a sale. Let's say that the multiple they were looking for was 5x. Where is Spotify going to get the 15 billion dollars for that sale? Certainly not from this direct listing. And even if they had that cash what happens when you buy a 3,500 employee mega corporation? You actually have to run it and run it well. [1] https://en.wikipedia.org/wiki/Warner_Music_Group https://en.wikipedia.org/wiki/Warner_Music_Group
pc2g4d 9y ago
Spotify already is a label. Right? A bunch of artists have done "Spotify Sessions".
- k_sh 9y ago
  Publishing recordings of live performances is pretty different from having a division of the company dedicated to supporting the careers of an artist roster
  - creaghpatr 9y ago
    I believe they are testing this in the 'generic' categories of music. Think elevator muzak - people want the ends and don't care about the means, so they can white label artists who make albums like "Ambient sleeping tones" or "Rain sounds" and algorithmically crowd out independent artists doing the same thing, thus getting a cut of the royalties in addition to the distribution fees. Edit: Like Aldi does for groceries
some_account 9y ago
Or compete with Netflix. If Viaplay can do it, perhaps Spotify can also.
rorykoehler 9y ago
They should just buy a significant stake in every major label with their ipo money
cwaffler 9y ago
If they start a label, I would hope that it doesn't try to compete with smaller record labels. It should compete with the big dogs and help out smaller ones similar to bandcamp. Idea: bandcamp + spotify...
- zouhair 9y ago
  If they start a label, the smaller labels will be the first one to feel the heat. Spotify would need to swallow them all to garner power so it can fight the bigger fish. If Spotify start a label and is successful with it, the Music industry will most likely end up worse state than it is now.
zouhair 9y ago
Can you imagine if most new artists start signing with this supposed new label. If it happens Spotify will be a monopoly soon enough and artists will be in a way worse state than they are now. Making a TV series or a movie is not the same as making Music. Artists sign with a label and they are more or less stuck with them.
martin_bech 9y ago
Isnt that actually in the same vein as what Tidal did/is doing? They even had exclusives, and I dont really think, its working out for them. Worth remembering, that most artist dont make real money on streaming, they make money playing live, merch etc.

by _zachs 9y ago

graphitezepp 9y ago

I doubt the need to poach the people, just the strategy itself. Would likely be better to find people used to managing bands, or doing whichever relevant recording company position, at a high level I would suspect

simias 9y ago

I'm not convinced. You don't consume music the way you consume TV shows and movies, it's often a more "passive" activity where you start a playlist in the background while you do other things. You can do that with movie/TV shows of course but a movie will last you ~two hours while a TV show can literally last you days or weeks at a time without input if you really like having The Office in the background while you do other things. Assuming that you can afford buying subscriptions to various services it's not massively annoying to have to use HBO Go to watch Westworld and Netflix to watch Arrested Development. It's not as good as having a unified service but it does the job. If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. When I hear a song out there and I want to add it to my playlist I expect that it will be available on Spotify and the vast majority of the time I'm right. If I need to go hunt for songs on various services and I can't easily make a single unified playlist with all of it I think it'll be back to piracy for me, it won't be less convenient and it'll be much cheaper.

gehsty 9y ago
I think Spotify's model would need to be slightly different to Netflix, I think they would still need to allow their artists music onto other platforms. The need for them to be a record label is not for exclusivity, it is so they can operate as an equal partner. At the moment their entire business is based on negotiating deals with record labels, all Spotify can offer is revenue, so they will be squeezed and squeezed as each contract is negotiated and renegotiated. Every artist that signs up to them will save them this cost in the long run... So I'm sure there'll be seemingly crazy deals like comedians have been striking with Netflix, which in the long run are will be very beneficial to Spotify.
- lambda_lover 9y ago
  Interesting thought. I've been very anti Spotify-as-a-label, but this is a really neat way of looking at it that I hadn't considered before. What if Spotify becomes a (small) label that's very artist-friendly? Then they can offer non-streaming distribution of their artists as a bargaining chip for existing labels. My only issue here is that I'm not sure if existing labels will begrudge a new competitor on the block (and then try to kill Spotify). It doesn't seem to me like Spotify being a fellow label gives them much more that the existing labels would want, but maybe I'm just not thinking of it. According to my memory and a little research [1], the record labels have some stock stake in Spotify. Personally I think this is Spotify's best bet: if the labels can derive stock gains from helping Spotify (plus licensing fees), they have skin in the game so they won't try to sabotage Spotify. I'm of the opinion that instead of trying to produce music (and fight the record labels), Spotify is better off getting into a complimentary position: make it easier for fans to find out about concert, purchase tickets at fair prices, and buy t-shirts. All stuff that Spotify can probably do better than the record labels, and which won't cut into label profits. [1] http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-spotify http://www.swedishwire.com/jobs/680-record-labels-part-owner...
lev99 9y ago
> If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. I have this problem with Spotify. About 80% of the music I like is on Spotify. Private label, soundcloud, older forgotten bands, and foreign music is often missing.
styfle 9y ago
One thing that stands out to me that differentiates Netflix vs Spotify is what happens when a license expires and content gets removed. With Netflix, my reaction depends on if I watched the content before it was removed. With Spotify, it's almost always rage. Why? I often listen to music more than once but I often don't watch movies more than once.

FreakyT 9y ago

It would definitely be a good direciton to go in, but I suspect a major potential problem for Spotify will be the possibility that the major record labels pull their tracks off Spotify in retaliation. This was less of an issue for Netflix as Netflix streaming already had an extremely limited selection of third-party licensed content.

TheGRS 9y ago
IIRC the original content was in response, not in spite of 3rd party content pulling out of Netflix.

andromedaworld 9y ago

The problem with this approach is that there's so much music out there because it is way cheaper to make music than it is to make films and shows. Even if spotify was somehow able to sign the top artists, they just couldn't keep up with the influx of new artists coming up every single day. Music lovers also tend to be very particular and nuanced about their taste in music. Therefore, if I as a consumer don't find my music on spotify it means I'd have no reason to subscribe nor come back to spotify.

decacorn 9y ago
same could be said about movies and tv shows. and netflix had no problem exploiting a market opportunity (produce actual quality content unlike the plethora of vapid crap currently pumped out on the mainstream media networks). so not hard to believe spotify can take the same approach. whether they can be successful is the big question.
mfoy_ 9y ago
Also I can listen to the same album over and over for hours on end, but once I've watched a TV series or movie I am unlikely to revisit it again for a decade. So exclusive TV/movie content has a "novelty appeal" that music doesn't.
epicide 9y ago
I think we might be seeing a shift in how people consume music that Spotify is (better?) positioned to take advantage of. First and foremost, I agree that Spotify will struggle if they try to compete with other services on providing all artists. It seems like listeners (or perhaps a subset) are listening by genre rather than by artist. I know genres and waves of music are nothing new, but with the lower barriers to creation as well as to consumption [1], we are seeing the number and frequency of new genres and sub-genres increase dramatically. Anecdotally, I find myself using radio based music a lot more. E.g. I have a Synthwave station on SoundCloud that I listen to. I think this style is further exemplified with the popularity of sharing Spotify playlists. This is also why I think Spotify in particular are ahead -- the very people who would listen to Spotify published content are the people that already use Spotify. In fact, I think this style better fits a lot of people who would use a streaming service in the first place. A lot of the people who want to listen to their favorite artists question the idea of paying for a subscription to maintain access to their favorite albums. Of course, if Spotify goes this route, they are not alone. They would have to compete with services like SoundCloud and BandCamp. I think they could find success by toeing the line between major label content and indie content. [1]: e.g. a "bedroom musician" can make their album over the course of a few weeks and then that album gets bought and listened to by someone thousands of miles away within minutes/hours of release. No printing copies, shipping, stocking, ticket purchasing, etc.

wilsonnb 9y ago

Starting their own label is biting the hand that feeds them, though. They need the libraries that the major labels have in order to stay in business. Perhaps when they're not competing as heavily with Apple and to a lesser extent Google they could start their own label and the major labels would just have to deal with it, but I don't think it's a realistic course of action until then.

redorb 9y ago

I don't feel we're at the point of saying 'it's turning out well' for Netflix. For sure on the awards side of things and quality shows etc... but haven't they raised billions upon billions in debt to make these shows? Their execution on doing their own content has been great. However the long term value of these movies / shows still has to prove out in profits at some point.

psergeant 9y ago
I’ve never heard anyone talk about Hulu and Chill

bogomipz 9y ago

>"Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them." This seems to be a common refrain that Spotify can just "pull a Netflix." And this is very unlikely. Firstly no matter how much opriginal content they could create, if they don't have back catalog it's going to be a total non-starter for the mainstream. A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. Also music and movies occupy very different spaces in peoples lives - emotionally, socially, where and how they're consumed and shared etc. People need music for their commute, for their workouts, for their parties, at bars and for their workdays. People only need movies when they're home or maybe stuck on an airplane. Lastly Spotify needs to stay in the record label's good graces. If they were ever to be viewed as a competitor or a thread to any the big 3 record labels it would be reflected in punitive price increase when it came time to renegotiate their licensing deals.

sailfast 9y ago
How many shares do we think it would take to purchase a major record label at this point? What about a perpetual license to their content (since buying a label could be seen as anti-competitive)? This would certainly help avoid some of the down-side risk to the business. That said, their IPO didn't exactly help the company clear the working capital they'd need to do this.
- subpixel 9y ago
  Not only are there numerous labels with "must have" back catalogs, they now all know exactly how much money Spotify has.
- bogomipz 9y ago
  Well there's no such things a "major record label" anymore. When people say "the Big 3" each of those three is global conglomerate. The result of years and years of consolidation. Using the smallest of these 3 Time Warner Music Group, the company did $2.87 billion in revenue in 2013[1]. Let's say that Warner was actually interested in a sale. Let's say that the multiple they were looking for was 5x. Where is Spotify going to get the 15 billion dollars for that sale? Certainly not from this direct listing. And even if they had that cash what happens when you buy a 3,500 employee mega corporation? You actually have to run it and run it well. [1] https://en.wikipedia.org/wiki/Warner_Music_Group https://en.wikipedia.org/wiki/Warner_Music_Group

pc2g4d 9y ago

Spotify already is a label. Right? A bunch of artists have done "Spotify Sessions".

k_sh 9y ago
Publishing recordings of live performances is pretty different from having a division of the company dedicated to supporting the careers of an artist roster
- creaghpatr 9y ago
  I believe they are testing this in the 'generic' categories of music. Think elevator muzak - people want the ends and don't care about the means, so they can white label artists who make albums like "Ambient sleeping tones" or "Rain sounds" and algorithmically crowd out independent artists doing the same thing, thus getting a cut of the royalties in addition to the distribution fees. Edit: Like Aldi does for groceries

some_account 9y ago

Or compete with Netflix. If Viaplay can do it, perhaps Spotify can also.

rorykoehler 9y ago

They should just buy a significant stake in every major label with their ipo money

cwaffler 9y ago

If they start a label, I would hope that it doesn't try to compete with smaller record labels. It should compete with the big dogs and help out smaller ones similar to bandcamp. Idea: bandcamp + spotify...

zouhair 9y ago
If they start a label, the smaller labels will be the first one to feel the heat. Spotify would need to swallow them all to garner power so it can fight the bigger fish. If Spotify start a label and is successful with it, the Music industry will most likely end up worse state than it is now.

zouhair 9y ago

Can you imagine if most new artists start signing with this supposed new label. If it happens Spotify will be a monopoly soon enough and artists will be in a way worse state than they are now. Making a TV series or a movie is not the same as making Music. Artists sign with a label and they are more or less stuck with them.

martin_bech 9y ago

Isnt that actually in the same vein as what Tidal did/is doing? They even had exclusives, and I dont really think, its working out for them. Worth remembering, that most artist dont make real money on streaming, they make money playing live, merch etc.