7 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 w

>"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
  - indemnity 9y ago
    Wow, the big three put together did a laughable amount of revenue compared to an average tech major, surprised they haven’t been bought yet. Where does the fear of these labels come from? Why doesn’t someone just buy them for the catalog, and fire everyone in the dying parts of the business? De-risk your revenue model, and gain leverage vs other streaming services.
reitanqild 9y ago
> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. I could mangage quite well without all these. Just one datapoint but...
- deleted 9y ago
  [deleted]
devilshaircut 9y ago
The same reasoning would also have applied to Netflix when it was a younger company, though (i.e. back catalog, staying in the good graces of licensors, etc.). Tidal has already been doing most of the stuff people are proposing here. It's a controversial topic but I don't think there is good evidence that music streaming services, from a business standpoint, shouldn't also be in the business of producing or sponsoring musicians.
mabramo 9y ago
Spotify should not "pull a Netflix". Spotify should "pull a Bandcamp". Rather, Bandcamp should start a streaming service. I've had a payment model in my pocket for years that I think would work really well for them.
- rm999 9y ago
  This wouldn't make much of an impact because the statistical distribution of music listening time has an extremely long tail, i.e. the most popular songs are far more popular than even other very popular songs. In a given market, something like 90% of listening time will come from the top few hundred tracks, and 99% will come from the first couple thousand. Those top couple thousands tracks are already well-served by alternative distribution channels (youtube, "indie" labels, etc), so there isn't much room for disruption there. Starting a service to fight for that 1% of listening time will not move the needle. source: I used to work in the data side of the music industry.
- siquick 9y ago
  You can already stream everything on Bandcamp.
mseebach 9y ago
Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue? Netflix has plenty of third-party content. I would assume that Spotify's music licences are highly variable cost, ie almost entirely pay-per-stream. All they need to do is to get people to stream less licenced content and more own-produced.
- dumbfounder 9y ago
  Because people expect broad coverage in their music service. When I ask alexa to play a song and she doesn't know it, I am like wtf? But I don't care if Netflix doesn't have every Matrix movie, I just watch something else.
  - jethro_tell 9y ago
    Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party.
    - vageli 9y ago
      > Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party. You nailed it. Music has a fundamentally different mode of consumption from music. People consume music in so many different ways and contexts. Music doesn't always demand your attention like a sensory-engrossing medium (like movies). But when music demands your attention (like having to change providers to hear a specific song) it introduces friction that is unnatural to that medium.
- headmelted 9y ago
  .. unless the music labels object to the conflict of interest. Spotify has a lot of competitors biting at it's heels, they're certainly the largest (and IMHO, best) at what they do, but they've by no means locked up the market. They're not exactly at the mercy of the labels, but they probably can't afford to piss them off either.
bootlooped 9y ago
> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. I disagree. I think for most people music is fungible; they just want something to listen to. I think Spotify can afford to have gaps in it's library. Sure, if a large enough portion of the music industry cut them off it would be an issue, but I don't think they're in imminent danger of that.
- CodeMage 9y ago
  I think you underestimate the annoyance and frustration users feel when content disappears from their library. This is especially noticeable in playlists: when half of your favorite workout playlist suddenly disappears, it's not something you'll ignore easily. People pay Spotify a monthly subscription for the convenience of being able to listen to the music of their choosing, at the time and place of their choosing. Anything that jeopardizes that convenience is going to be a problem.
  - oarsinsync 9y ago
    It’s already happening, and it’s less of a problem than I thought it would be. Some of my playlists are 200+ tracks. A few songs go missing from time to time. I can never remember which tracks have gone, I just know something’s missing as the flow from song to song is off. It’s extremely irritating, but not enough to make me go elsewhere as I can’t see any other service not having the same problem.
    - CodeMage 9y ago
      Yeah, it's already happening, that's why I brought it up. Right now it's not a huge problem, because it doesn't happen too often or on a large scale. Like you said, it's usually a couple of songs in a larger playlist. Now, imagine the scenario comparable to what @bogomipz said above: "no Beatles, Pink Floyd, No Motown, No AC/DC". I'm betting all of us would be a lot more frustrated and irritated than we are right now. Maybe you won't do anything about it. Maybe I won't, either. But it sounds plausible that a lot of people will, whether they switch to a different service, come up with a solution of their own or simply revert to piracy.
wyclif 9y ago
A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly Last I checked, Spotify has those artists. Have you actually used Spotify lately?
- thegeekpirate 9y ago
  Read the context.
  - wyclif 9y ago
    I did. The context is Spotify's back catalogue. Which includes the Beatles, Pink Floyd, Motown, et al.
    - mikeash 9y ago
      It could easily stop including those if the record companies think Spotify is competing with them instead of helping them. I think that's the point being made: that back catalog is leverage that will stop Spotify from ever rocking the boat the way Netflix has.
    - thegeekpirate 9y ago
      They aren't saying Spotify doesn't _currently_ have those artists, they're saying that they wouldn't survive as a music streaming service _without_ them, as no one only listens to the latest and greatest, as many do with TV/Movies. Thus, Spotify can't directly attempt to go in the same direction that Netflix did, as the other labels would see them attempting to compete and could possibly pull out, destroying any reason to use Spotify in the first place.
verelo 9y ago
Yeah i disagree. In 20 years, the Beatles and ac/dc will be less relevant and easier to live without. If Spotify start their own content channels now, and i imagine they have, the situation could easily be reversed, where they have exclusive rights to the content that others want. Time will tell but i feel like this can go either way.
- bogomipz 9y ago
  >" In 20 years, the Beatles and ac/dc will be less relevant and easier to live without." If you made that statement I'm guessing that you don't realize that the Beatles have been relevant for 50 plus years now and AC/DC for 40 plus years. They are so enduring because they are classics. It's amusing that you believe that when yet another generation discovers these artists they are somehow going to become less relevant. Both of those artists that you used in your example were long time hold outs to allowing their music to be streamed. And it was huge news for Spotify when they were added to their catalog. It's worth mentioned that Beatles tracks were streamed 50 million times in the first 48 hours that they were available for streaming.[1] [1] https://www.pastemagazine.com/articles/2015/12/beatles-songs-were-streamed-50-million-times-in-th.html https://www.pastemagazine.com/articles/2015/12/beatles-songs...
  - orbitur 9y ago
    They have been relevant, yes, but that doesn't mean their primary audience isn't aging. If you truly believe the Beatles and AC/DC are gaining more followers than they are losing, you are woefully out of touch. Spotify was excited to get them because it means older people might join. A larger audience, that's it.
    - alphaalpha101 9y ago
      The Beatles is definitely gaining more fans that they're losing.
    - bogomipz 9y ago
      You are flat out wrong. 65% of those 50 million streams in the first 48 hours were by people under the age of 34. See: https://www.thewrap.com/beatles-songs-stream-50-million-times-in-48-hours/ https://www.thewrap.com/beatles-songs-stream-50-million-time... So yeah, catalog is king.
astronautjones 9y ago
They'll be able to buy a bunch of those classic catalogs with the money investors are pouring in
dannyw 9y ago
Why do you think Spotify has to ditch every other label when they start a new label? I think you're overblowing the power of music labels. Indie and emerging artists aren't going to sign with a label if it means their music isn't available on Spotify, the #1 streaming service. Music labels may have modestly more leverage, but it is not impossible for Spotify to start their own label while also maintaining relationships with existing ones.
- creaghpatr 9y ago
  Inversely, Spotify can buy super-low on fast-growing artists because they can juice the distribution channels for that artist.
madshiva 9y ago
Whoua, if you like this type of music you should run your own streaming server (like I do .. you know subsonic) ... no ways young people will really listen to this. I listen streaming to discover news artists, songs, not for listening the same songs over and over. (PS: I had listening Beatles for so long time that now I don't want to hear any of their song, same apply with a lof of artists). I just can't stay listening the same things. It's why too I don't like Spotify, new artists are too mainstream. I want "poor" artists, new challenger, not already know artists.

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
- indemnity 9y ago
  Wow, the big three put together did a laughable amount of revenue compared to an average tech major, surprised they haven’t been bought yet. Where does the fear of these labels come from? Why doesn’t someone just buy them for the catalog, and fire everyone in the dying parts of the business? De-risk your revenue model, and gain leverage vs other streaming services.

reitanqild 9y ago

> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. I could mangage quite well without all these. Just one datapoint but...

deleted 9y ago
[deleted]

devilshaircut 9y ago

The same reasoning would also have applied to Netflix when it was a younger company, though (i.e. back catalog, staying in the good graces of licensors, etc.). Tidal has already been doing most of the stuff people are proposing here. It's a controversial topic but I don't think there is good evidence that music streaming services, from a business standpoint, shouldn't also be in the business of producing or sponsoring musicians.

mabramo 9y ago

Spotify should not "pull a Netflix". Spotify should "pull a Bandcamp". Rather, Bandcamp should start a streaming service. I've had a payment model in my pocket for years that I think would work really well for them.

rm999 9y ago
This wouldn't make much of an impact because the statistical distribution of music listening time has an extremely long tail, i.e. the most popular songs are far more popular than even other very popular songs. In a given market, something like 90% of listening time will come from the top few hundred tracks, and 99% will come from the first couple thousand. Those top couple thousands tracks are already well-served by alternative distribution channels (youtube, "indie" labels, etc), so there isn't much room for disruption there. Starting a service to fight for that 1% of listening time will not move the needle. source: I used to work in the data side of the music industry.
siquick 9y ago
You can already stream everything on Bandcamp.

mseebach 9y ago

Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue? Netflix has plenty of third-party content. I would assume that Spotify's music licences are highly variable cost, ie almost entirely pay-per-stream. All they need to do is to get people to stream less licenced content and more own-produced.

dumbfounder 9y ago
Because people expect broad coverage in their music service. When I ask alexa to play a song and she doesn't know it, I am like wtf? But I don't care if Netflix doesn't have every Matrix movie, I just watch something else.
- jethro_tell 9y ago
  Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party.
  - vageli 9y ago
    > Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party. You nailed it. Music has a fundamentally different mode of consumption from music. People consume music in so many different ways and contexts. Music doesn't always demand your attention like a sensory-engrossing medium (like movies). But when music demands your attention (like having to change providers to hear a specific song) it introduces friction that is unnatural to that medium.
headmelted 9y ago
.. unless the music labels object to the conflict of interest. Spotify has a lot of competitors biting at it's heels, they're certainly the largest (and IMHO, best) at what they do, but they've by no means locked up the market. They're not exactly at the mercy of the labels, but they probably can't afford to piss them off either.

bootlooped 9y ago

> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly. I disagree. I think for most people music is fungible; they just want something to listen to. I think Spotify can afford to have gaps in it's library. Sure, if a large enough portion of the music industry cut them off it would be an issue, but I don't think they're in imminent danger of that.

CodeMage 9y ago
I think you underestimate the annoyance and frustration users feel when content disappears from their library. This is especially noticeable in playlists: when half of your favorite workout playlist suddenly disappears, it's not something you'll ignore easily. People pay Spotify a monthly subscription for the convenience of being able to listen to the music of their choosing, at the time and place of their choosing. Anything that jeopardizes that convenience is going to be a problem.
- oarsinsync 9y ago
  It’s already happening, and it’s less of a problem than I thought it would be. Some of my playlists are 200+ tracks. A few songs go missing from time to time. I can never remember which tracks have gone, I just know something’s missing as the flow from song to song is off. It’s extremely irritating, but not enough to make me go elsewhere as I can’t see any other service not having the same problem.
  - CodeMage 9y ago
    Yeah, it's already happening, that's why I brought it up. Right now it's not a huge problem, because it doesn't happen too often or on a large scale. Like you said, it's usually a couple of songs in a larger playlist. Now, imagine the scenario comparable to what @bogomipz said above: "no Beatles, Pink Floyd, No Motown, No AC/DC". I'm betting all of us would be a lot more frustrated and irritated than we are right now. Maybe you won't do anything about it. Maybe I won't, either. But it sounds plausible that a lot of people will, whether they switch to a different service, come up with a solution of their own or simply revert to piracy.

wyclif 9y ago

A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly Last I checked, Spotify has those artists. Have you actually used Spotify lately?

thegeekpirate 9y ago
Read the context.
- wyclif 9y ago
  I did. The context is Spotify's back catalogue. Which includes the Beatles, Pink Floyd, Motown, et al.
  - mikeash 9y ago
    It could easily stop including those if the record companies think Spotify is competing with them instead of helping them. I think that's the point being made: that back catalog is leverage that will stop Spotify from ever rocking the boat the way Netflix has.
  - thegeekpirate 9y ago
    They aren't saying Spotify doesn't _currently_ have those artists, they're saying that they wouldn't survive as a music streaming service _without_ them, as no one only listens to the latest and greatest, as many do with TV/Movies. Thus, Spotify can't directly attempt to go in the same direction that Netflix did, as the other labels would see them attempting to compete and could possibly pull out, destroying any reason to use Spotify in the first place.

verelo 9y ago

Yeah i disagree. In 20 years, the Beatles and ac/dc will be less relevant and easier to live without. If Spotify start their own content channels now, and i imagine they have, the situation could easily be reversed, where they have exclusive rights to the content that others want. Time will tell but i feel like this can go either way.

bogomipz 9y ago
>" In 20 years, the Beatles and ac/dc will be less relevant and easier to live without." If you made that statement I'm guessing that you don't realize that the Beatles have been relevant for 50 plus years now and AC/DC for 40 plus years. They are so enduring because they are classics. It's amusing that you believe that when yet another generation discovers these artists they are somehow going to become less relevant. Both of those artists that you used in your example were long time hold outs to allowing their music to be streamed. And it was huge news for Spotify when they were added to their catalog. It's worth mentioned that Beatles tracks were streamed 50 million times in the first 48 hours that they were available for streaming.[1] [1] https://www.pastemagazine.com/articles/2015/12/beatles-songs-were-streamed-50-million-times-in-th.html https://www.pastemagazine.com/articles/2015/12/beatles-songs...
- orbitur 9y ago
  They have been relevant, yes, but that doesn't mean their primary audience isn't aging. If you truly believe the Beatles and AC/DC are gaining more followers than they are losing, you are woefully out of touch. Spotify was excited to get them because it means older people might join. A larger audience, that's it.
  - alphaalpha101 9y ago
    The Beatles is definitely gaining more fans that they're losing.
  - bogomipz 9y ago
    You are flat out wrong. 65% of those 50 million streams in the first 48 hours were by people under the age of 34. See: https://www.thewrap.com/beatles-songs-stream-50-million-times-in-48-hours/ https://www.thewrap.com/beatles-songs-stream-50-million-time... So yeah, catalog is king.

astronautjones 9y ago

They'll be able to buy a bunch of those classic catalogs with the money investors are pouring in

dannyw 9y ago

Why do you think Spotify has to ditch every other label when they start a new label? I think you're overblowing the power of music labels. Indie and emerging artists aren't going to sign with a label if it means their music isn't available on Spotify, the #1 streaming service. Music labels may have modestly more leverage, but it is not impossible for Spotify to start their own label while also maintaining relationships with existing ones.

creaghpatr 9y ago
Inversely, Spotify can buy super-low on fast-growing artists because they can juice the distribution channels for that artist.

madshiva 9y ago

Whoua, if you like this type of music you should run your own streaming server (like I do .. you know subsonic) ... no ways young people will really listen to this. I listen streaming to discover news artists, songs, not for listening the same songs over and over. (PS: I had listening Beatles for so long time that now I don't want to hear any of their song, same apply with a lof of artists). I just can't stay listening the same things. It's why too I don't like Spotify, new artists are too mainstream. I want "poor" artists, new challenger, not already know artists.