6 ms·

I'm a huge Spotify fan. In fact, I love it so much that I haven't purchased a song from iTunes in months. That alone should speak volumes about their position i

by nlh 14y ago

I'm a huge Spotify fan. In fact, I love it so much that I haven't purchased a song from iTunes in months. That alone should speak volumes about their position in the industry - I can't be alone here, and that means that for some significant portion of people, money has stopped going to Apple for music and now goes to Spotify. But here's the thing -- Spotify is too cheap. Their service is amazing and far, far too inexpensive relative to what they provide. They provide a bulk of their service for free, and people like me who want a bit more pay $10 a month. To get access to 5,000 songs via iTunes would cost me (roughly) $5000 -- and people are willing to pay it. That's 500 months of Spotify (42 years!) subscription to generate the same amount of revenue. So while I agree that music licensing costs, particular for radio-like services like Pandora, need to go down to be more in line with broadcast rates, I don't think that's what's hurting Spotify here. I think they're providing far too much value for what they get paid.

daleharvey 14y ago
As mentioned elsewhere in this thread, I think spotify have positioned themselves exactly to be in this situation. If they earn more money, the music labels still have all the negotiating power and will just take it, and if they raise their prices, less subscribers. At a guess, I think spotify are trying to squeeze themselves into a position where the labels need spotify because otherwise artists just will not have the same reach otherwise, I know I dont listen to a band until they put their stuff on spotify. I have seen labels + bands be more reactive to making sure their stuff hits spotify quickly which seems to show a shift in power, hopefully the trend continues.
- ChuckMcM 14y ago
  The challenge then is to make money but appear to lose it, this appeases the music labels who think they are taking all the value off the table. It seems we need a tech company that can do 'hollywood accounting' where they give the labels 40% of the 'net' and sadly there is no net.
ohashi 14y ago
Conversely, I hardly listen to music and bought maybe 10 CDs in my entire life. Spotify changed my behavior dramatically. I consume a lot more music now, that I wouldn't have otherwise. Spotify has got more money out of me than the sum of all my other music related spending. It's very possible I am an outlier though.
myspy 14y ago
I've experienced the service differently. I'm more old school. Spotify does not give me the feeling to be the master of my library and that this music belongs to me. I'm more happy with buying albums I love and archiving them. So, I'm looking forward to the new iTunes, I hope it combines the old way with the new way in new ways. But Spotify has to work more on discoverability of new artists and music. I'm not convinced by there app.
- pixie_ 14y ago
  Spotify helps you be 'master of your library' by putting a file icon next to songs you have locally. It's pretty much telling you exactly what you need to download for 'backup.'
- mattacular 14y ago
  It doesn't have to be mutually exclusive... I collect records and digital files, but when I'm away from my collection - whether it be at work, on the go, in the car - I've been making use of Spotify. The library is really good, and the app itself is quite nice. It has this amazing thing called QUEUING (iTunes - I'm looking at you) and the social aspect of it is actually pretty useful. You can search playlists for anything from "Jazz for dummies" to "Breaking Bad soundtrack" and sure enough, somebody will have gone through the trouble of assembling a really high quality mix from the Spotify library. So no, Spotify obviously isn't going to give you the same feeling as physically collecting music releases. It doesn't try to. I will add that I do have a few negatives surrounding Spotify. I think it is a pretty poor music discoverability tool (outside of searching for social playlists to subscribe to). The radio is very poor, and some of the tagging/cataloguing of their vast collection leaves a bit to be desired.
deleted 14y ago
[deleted]
cloverich 14y ago
Disagree that the price is too low. I think its sitting right at the top of what most are willing to pay. I think of it like this: for 10 bucks a month, every month I have Spotify, I could have owned an album on one of my playlists. After 2-3 years, I basically own nothing, when I could have owned most of the music I listen to. Most of the people I've introduced Spotify to are on a similar wavelength. On top of that, the idea that Spotify may not be around in a year or two add's even more hesitance on my part to keep the $10 subscription. I really hope it all works out for them (and us).
- mchusma 14y ago
  Interesting usecase. I probably like listening to about 10-20% music a day that I have never heard before. Every 2-3 years, I am basically still only listening to 5% of the music I did like in that time period. So the musical "churn" for me is high where ownership is essentially meaningless. But I can see how someone with a different set discovery needs/wants would have a very different sense for the product.
  - dromidas 14y ago
    That's exactly how I listen to music too. I've got a very small selection of albums I've listened to throughout my life and other than them my music churn has always been as high as possible, though typically a great album lasts a month or 2.
- YokoZar 14y ago
  Do you really want to own all your music? Rhetorically, it sounds like an obvious "yes", but if I personally think back to all the stuff I got as a teenager and hardly ever listen to anymore, not owning it might be entirely fine. Ownership is less of a burden when there's no physical media, of course, and there's still some old music everyone keeps coming back to. But a lot of music is ephemeral, and only having access to it when it's current might not be so bad.
- randomchars 14y ago
  "I could have owned most of the music I listen to" If you're only listening to 24-36 albums in 2-3 years than yeah you could have and maybe you should have. If you listen to that much in a month or sometimes a week than Spotify is by far the best thing ever.
crucialfelix 14y ago
From a musician's perspective the entire problem with Spotify is that its replacing sales and yet its paying broadcast performance royalties. Broadcast has always been promotion for sales. That's how you sell recordings: you get it on radio. Spotify looks and acts like iTunes. Its replacing the user need for purchasing, its not replacing radio. And yet they want to pay like radio. So they've disrupted digital sales and cannibalized an industry in doing so. Oh I know .. we can always go sell t-shirts at our gigs. until the kids figure out how to 3d print those.
- Adirael 14y ago
  I know the part about t-shirts is a joke, but you can print your own with stuff bought at Home Depot and in a DIY setup the cost is roughly 3$, being the most expensive stuff the t-shirt and the paint.
- tjoff 14y ago
  A lot of people seem to compare the earnings from one listening on spotify to the sale of a single... Thing is, you have no idea how often that single is played. If the customer are crazy about it the musician would most likely earn more if he listened through spotify rather than buying it. If on the other hand the customer gets bored of it quickly the musician would barely get anything through spotify. Also, one listening doesn't equal to a lost sale. Especially considering how easy (and wonderful) it is to just be able try new stuff out when there is no barrier or cost associated with it. Musicians get waay more money from me thanks to spotify than they ever would get otherwise. And I bet there is a whole generation where this is/will be quite common. There are winners and loser though, those artists that make songs that only last two weeks probably loose on spotify. I see that as a bonus.
  - thirdsun 14y ago
    And that's the problem: You, as a listener, think you're doing the noble thing by using spotify instead of pirating, but it really doesn't matter if those two are the only options you'd consider. Of course you're on the legal site of music consumption now, but don't fool yourself into thinking that artists should be well off thanks to you. Well known by now, but have a look at this infographic again: http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/ http://www.informationisbeautiful.net/2010/how-much-do-music... I admit I'm a rdio subscriber and artist, but rdio, for me, just serves as a tastemaker, pre-listening source and mobile collection without limited space - everything I like, I buy elsewhere in lossless formats. Sadly, I guess that's a rather rare use of streaming services as people will often see them as a replacement to buying things they enjoy.
thecoffman 14y ago
I disagree on it being priced too low. I realize that in some sense, they have to play to cards they are dealt by the labels - but 10 bucks a month is far too much for streaming music. If Netflix can stream unlimited HD video for 8 bucks a month, there's no (technical) reason audio should be more expensive than that. The only thing holding them back is the politics of the music industry. IMO, a fair price point for streaming audio has to be < 5 bucks a month at the high end. The marginal cost of a song being streamed is basically zero at technical level.
- ryanwaggoner 14y ago
  You're confusing cost with value.
  - thecoffman 14y ago
    I'm aware of the distinction - but in this case - to me at least - the cost and the value are the same. The value of streaming songs is exceptionally minimal when they are easily acquired for free via other means. The only value add in my mind is the convenience of not having to download albums in the first place. The value of that convenience is tied very closely to the cost of providing it as I could set up my own streaming service for personal use "at cost" so to speak with a cheap vps and a collection of downloaded music - or use something like iTunes match which costs ~$2.00 a month, if I'm willing to put forth the effort to acquire the music initially.
- dkasper 14y ago
  If Netflix had almost every new movie release and a larger catalog maybe it would be an apples to apples comparison.
- nlh 14y ago
  I knew someone would mention Netflix for comparison -- the problem is that I think they're too inexpensive as well :) Mind you, as a consumer I'm not complaining about low prices. It's awesome. But I'm also mindful of the economics -- I pay $50+ / month for my cable TV subscription. I don't like it. I'm not "happy" about it. But you know what -- I haven't cancelled it yet either, so something's keeping me there -likely the 'flip channels' factor, which is nice and brainless, and the availability of live news - MSNBC, CNN, local news, etc. Sometimes you just want to sit down and turn the TV on, and I'm willing to pay for that. But the point remains that there's a big gap between $9.99 Spotify / $8 Netflix and $50-$100 cable, both of which many people are willing to pay for.
encoderer 14y ago
Maybe for you. So maybe they should come up with an additional tier to grab some of your consumer surplus. But for me? I compare it to the $30/year I pay Pandora. I have a Pandora app in my car, on my TV, on every phone and computer, etc. It's ubiquitous and the fact that I can't pick a specific song is meaningless to me. In fact, I like it much better. I can work and live my life and not have to spend a single second worrying about playlists and song selection. Lately I've really liked the rebooted Songza.com -- it's curated playlists vs Pandora's algorithm-driven model. The playlists are great and the activity-centric UI is pretty awesome too.
- randomchars 14y ago
  If you like Songza check out http://8tracks.com http://8tracks.com too.
notatoad 14y ago
Spotify isn't just competing with iTunes, they're competing with piracy. And while $10 a month is nothing compared to maintaining a comprable iTunes collection, it's a lot compared to free. I think $10 is the sweet spot. I used to be a fairly big music pirate (what.cd elite, if that means anything to anybody), and RDIO at $10/month has completely replaced my whole illegal music collection. If it were more than that, i'd probably start thinking about whether it was worth the money or not, but at $10/mo i don't even think about it.
gcr 14y ago
I do not consider the hidden tax of forcing me to use my facebook account worth it. That's not cheap; it's merely a different kind of currency. Edit: I am mistaken; they allow users wihtout facebook accounts to sign up now (see elsewhere in the thread)

by nlh 14y ago

daleharvey 14y ago

As mentioned elsewhere in this thread, I think spotify have positioned themselves exactly to be in this situation. If they earn more money, the music labels still have all the negotiating power and will just take it, and if they raise their prices, less subscribers. At a guess, I think spotify are trying to squeeze themselves into a position where the labels need spotify because otherwise artists just will not have the same reach otherwise, I know I dont listen to a band until they put their stuff on spotify. I have seen labels + bands be more reactive to making sure their stuff hits spotify quickly which seems to show a shift in power, hopefully the trend continues.

ChuckMcM 14y ago
The challenge then is to make money but appear to lose it, this appeases the music labels who think they are taking all the value off the table. It seems we need a tech company that can do 'hollywood accounting' where they give the labels 40% of the 'net' and sadly there is no net.

ohashi 14y ago

Conversely, I hardly listen to music and bought maybe 10 CDs in my entire life. Spotify changed my behavior dramatically. I consume a lot more music now, that I wouldn't have otherwise. Spotify has got more money out of me than the sum of all my other music related spending. It's very possible I am an outlier though.

myspy 14y ago

I've experienced the service differently. I'm more old school. Spotify does not give me the feeling to be the master of my library and that this music belongs to me. I'm more happy with buying albums I love and archiving them. So, I'm looking forward to the new iTunes, I hope it combines the old way with the new way in new ways. But Spotify has to work more on discoverability of new artists and music. I'm not convinced by there app.

pixie_ 14y ago
Spotify helps you be 'master of your library' by putting a file icon next to songs you have locally. It's pretty much telling you exactly what you need to download for 'backup.'
mattacular 14y ago
It doesn't have to be mutually exclusive... I collect records and digital files, but when I'm away from my collection - whether it be at work, on the go, in the car - I've been making use of Spotify. The library is really good, and the app itself is quite nice. It has this amazing thing called QUEUING (iTunes - I'm looking at you) and the social aspect of it is actually pretty useful. You can search playlists for anything from "Jazz for dummies" to "Breaking Bad soundtrack" and sure enough, somebody will have gone through the trouble of assembling a really high quality mix from the Spotify library. So no, Spotify obviously isn't going to give you the same feeling as physically collecting music releases. It doesn't try to. I will add that I do have a few negatives surrounding Spotify. I think it is a pretty poor music discoverability tool (outside of searching for social playlists to subscribe to). The radio is very poor, and some of the tagging/cataloguing of their vast collection leaves a bit to be desired.

deleted 14y ago

[deleted]

cloverich 14y ago

Disagree that the price is too low. I think its sitting right at the top of what most are willing to pay. I think of it like this: for 10 bucks a month, every month I have Spotify, I could have owned an album on one of my playlists. After 2-3 years, I basically own nothing, when I could have owned most of the music I listen to. Most of the people I've introduced Spotify to are on a similar wavelength. On top of that, the idea that Spotify may not be around in a year or two add's even more hesitance on my part to keep the $10 subscription. I really hope it all works out for them (and us).

mchusma 14y ago
Interesting usecase. I probably like listening to about 10-20% music a day that I have never heard before. Every 2-3 years, I am basically still only listening to 5% of the music I did like in that time period. So the musical "churn" for me is high where ownership is essentially meaningless. But I can see how someone with a different set discovery needs/wants would have a very different sense for the product.
- dromidas 14y ago
  That's exactly how I listen to music too. I've got a very small selection of albums I've listened to throughout my life and other than them my music churn has always been as high as possible, though typically a great album lasts a month or 2.
YokoZar 14y ago
Do you really want to own all your music? Rhetorically, it sounds like an obvious "yes", but if I personally think back to all the stuff I got as a teenager and hardly ever listen to anymore, not owning it might be entirely fine. Ownership is less of a burden when there's no physical media, of course, and there's still some old music everyone keeps coming back to. But a lot of music is ephemeral, and only having access to it when it's current might not be so bad.
randomchars 14y ago
"I could have owned most of the music I listen to" If you're only listening to 24-36 albums in 2-3 years than yeah you could have and maybe you should have. If you listen to that much in a month or sometimes a week than Spotify is by far the best thing ever.

crucialfelix 14y ago

From a musician's perspective the entire problem with Spotify is that its replacing sales and yet its paying broadcast performance royalties. Broadcast has always been promotion for sales. That's how you sell recordings: you get it on radio. Spotify looks and acts like iTunes. Its replacing the user need for purchasing, its not replacing radio. And yet they want to pay like radio. So they've disrupted digital sales and cannibalized an industry in doing so. Oh I know .. we can always go sell t-shirts at our gigs. until the kids figure out how to 3d print those.

Adirael 14y ago
I know the part about t-shirts is a joke, but you can print your own with stuff bought at Home Depot and in a DIY setup the cost is roughly 3$, being the most expensive stuff the t-shirt and the paint.
tjoff 14y ago
A lot of people seem to compare the earnings from one listening on spotify to the sale of a single... Thing is, you have no idea how often that single is played. If the customer are crazy about it the musician would most likely earn more if he listened through spotify rather than buying it. If on the other hand the customer gets bored of it quickly the musician would barely get anything through spotify. Also, one listening doesn't equal to a lost sale. Especially considering how easy (and wonderful) it is to just be able try new stuff out when there is no barrier or cost associated with it. Musicians get waay more money from me thanks to spotify than they ever would get otherwise. And I bet there is a whole generation where this is/will be quite common. There are winners and loser though, those artists that make songs that only last two weeks probably loose on spotify. I see that as a bonus.
- thirdsun 14y ago
  And that's the problem: You, as a listener, think you're doing the noble thing by using spotify instead of pirating, but it really doesn't matter if those two are the only options you'd consider. Of course you're on the legal site of music consumption now, but don't fool yourself into thinking that artists should be well off thanks to you. Well known by now, but have a look at this infographic again: http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/ http://www.informationisbeautiful.net/2010/how-much-do-music... I admit I'm a rdio subscriber and artist, but rdio, for me, just serves as a tastemaker, pre-listening source and mobile collection without limited space - everything I like, I buy elsewhere in lossless formats. Sadly, I guess that's a rather rare use of streaming services as people will often see them as a replacement to buying things they enjoy.

thecoffman 14y ago

I disagree on it being priced too low. I realize that in some sense, they have to play to cards they are dealt by the labels - but 10 bucks a month is far too much for streaming music. If Netflix can stream unlimited HD video for 8 bucks a month, there's no (technical) reason audio should be more expensive than that. The only thing holding them back is the politics of the music industry. IMO, a fair price point for streaming audio has to be < 5 bucks a month at the high end. The marginal cost of a song being streamed is basically zero at technical level.

ryanwaggoner 14y ago
You're confusing cost with value.
- thecoffman 14y ago
  I'm aware of the distinction - but in this case - to me at least - the cost and the value are the same. The value of streaming songs is exceptionally minimal when they are easily acquired for free via other means. The only value add in my mind is the convenience of not having to download albums in the first place. The value of that convenience is tied very closely to the cost of providing it as I could set up my own streaming service for personal use "at cost" so to speak with a cheap vps and a collection of downloaded music - or use something like iTunes match which costs ~$2.00 a month, if I'm willing to put forth the effort to acquire the music initially.
dkasper 14y ago
If Netflix had almost every new movie release and a larger catalog maybe it would be an apples to apples comparison.
nlh 14y ago
I knew someone would mention Netflix for comparison -- the problem is that I think they're too inexpensive as well :) Mind you, as a consumer I'm not complaining about low prices. It's awesome. But I'm also mindful of the economics -- I pay $50+ / month for my cable TV subscription. I don't like it. I'm not "happy" about it. But you know what -- I haven't cancelled it yet either, so something's keeping me there -likely the 'flip channels' factor, which is nice and brainless, and the availability of live news - MSNBC, CNN, local news, etc. Sometimes you just want to sit down and turn the TV on, and I'm willing to pay for that. But the point remains that there's a big gap between $9.99 Spotify / $8 Netflix and $50-$100 cable, both of which many people are willing to pay for.

encoderer 14y ago

Maybe for you. So maybe they should come up with an additional tier to grab some of your consumer surplus. But for me? I compare it to the $30/year I pay Pandora. I have a Pandora app in my car, on my TV, on every phone and computer, etc. It's ubiquitous and the fact that I can't pick a specific song is meaningless to me. In fact, I like it much better. I can work and live my life and not have to spend a single second worrying about playlists and song selection. Lately I've really liked the rebooted Songza.com -- it's curated playlists vs Pandora's algorithm-driven model. The playlists are great and the activity-centric UI is pretty awesome too.

randomchars 14y ago
If you like Songza check out http://8tracks.com http://8tracks.com too.

notatoad 14y ago

Spotify isn't just competing with iTunes, they're competing with piracy. And while $10 a month is nothing compared to maintaining a comprable iTunes collection, it's a lot compared to free. I think $10 is the sweet spot. I used to be a fairly big music pirate (what.cd elite, if that means anything to anybody), and RDIO at $10/month has completely replaced my whole illegal music collection. If it were more than that, i'd probably start thinking about whether it was worth the money or not, but at $10/mo i don't even think about it.

gcr 14y ago

I do not consider the hidden tax of forcing me to use my facebook account worth it. That's not cheap; it's merely a different kind of currency. Edit: I am mistaken; they allow users wihtout facebook accounts to sign up now (see elsewhere in the thread)