Spotify’s American Release

30Aug11


From the perspective of the music industry, the biggest news story of the summer had to be the American launch of Spotify, the cloud streaming music service which, for the first time, captures the essence of the celestial jukebox. While flash-based apps and streaming services (ie: Grooveshark) have existed for some time, Spotify is the

first cloud based streaming service with full legal standing. In addition, Spotify features a user-friendly desktop and mobile app, iTunes integration, proper tagging, and a massive catalogue. To no surprise, all of these features come at a price. You can use Spotify for free, but expect frequent ads and an eventual user cap of ten hours per month. For $5 you can eliminate the cap and the ads, and for $10 you can unlock Spotify’s full potential which includes mobile streaming, offline listening, and enhanced streaming bitrates.

Music fans of fringe genre are likely to find holes in the catalogue, while Torrent hounds are unlikely to change their non-paying ways, but for the average music fan Spotify offers a game-changing service. For the price of a CD, users can have access to an iTunes-sized catalogue wherever they go (assuming they have an internet connection of course).

From a business perspective, Spotify embodies a few trends. Since the launch of iTunes, power in the music industry has continually been sapped from the major record labels. At one time huge conglomerates who owned all the channels of distribution, publishing, recording, and marketing, major labels have lost control of distribution as third party players like Apple and Spotify have swooped in, responding to the labels sluggishness in establishing homegrown digital distribution channels. While Apple’s iTunes provided a payout of 70 cents for each download to the label/artist, a big hit considering labels were taking home an average of $12 for each $18.99 CD sale, payout on Spotify per stream is next to nothing. Paying out between 0.02 cents and 0.06 cents per stream, a listener would have to stream a song over 3,000 times to equal the 70 cent payout of one iTunes download. In order to compensate for their losses in music sales, record companies will have to make up revenue in other areas, most likely by signing their artists to 360 deals.

From a consumer perspective Spotify really exemplifies the growing sense of individualism and a desire to connect. Unlike radio, or even Pandora for that matter, Spotify is the music you want, when you want it, wherever you want it. In addition, Spotify’s social features allow you to share playlists and song recommendations with other Spotify users through Facebook.

Here is the article from Wired about the launch: http://www.wired.com/epicenter/2011/07/spotify-launches-in-the-u-s-at-last/

-Mike Lang

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One Response to “Spotify’s American Release”

  1. 1 T505

    I love Spotify (or as my brother calls it iPandora= iTunes + Pandora)! I was introduced to it this summer and recommend it to people all the time!


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