Spotify - Music to my Ears

By Joanne Pontee, Marketing Manager

My friend’s 10 year old son asked me the other day for some help with his school history project. His class are studying the “eighties” and they had been asked to take in to school any items they could find from this era to create a history board. After recovering from the shock that I’m now old enough for my teenage years to be studied as a school history project, I set about trying to track down some ancient relics in the house that might be of interest.

You’ll be relieved to know that the leg warmers and the unfeasibly large day glow plastic earrings were discarded a long time ago, but I did come across a box of old cassettes. In amongst ‘Duran Duran’ and ‘Haircut 100” were several C60 cassettes, on to which I had carefully recorded the top 20 off the radio one Sunday evening in 1985 . Most of the tracks had the first few seconds of the song missing where I’d been too slow lifting my finger off the pause button! My friend’s son, who is very much of the iPod generation, having bypassed CD’s for iTunes, stared in awe at the cassette. He looked incredulous when I told him that it only held an hour’s worth of music, about 12 tracks, and even worse, that you had to physically turn it over to listen to the other side!

The encounter with the box of dusty cassettes coincided with the news that Spotify, the free peer to peer streaming music service, had just reached the landmark of signing up 1 million UK users. I must admit that although I have moved on to iTunes from cassettes, I’m still playing catch up with the digital music revolution, so decided to take a closer look at Spotify.

Originating from Sweden, the country that incidentally also spawned Pirate Bay, Spotify was officially launched in October 2008 in the UK, Germany, France, Italy, Spain, Finland, Norway and Sweden. Its founders are two entrepreneurs with a successful track record in online ventures, Daniel Ek and Martin Lorentzon. In a nutshell, the aim of Spotify is to "aggregate content from rights holders, distribute it to consumers through their technical platform and monetise both through a free, ad-funded service and a subscription service". In other words, Spotify’s music streaming service provides free access to thousands of diverse tracks in exchange for listening to adverts. Audio adverts run every 20 minutes and are also supplemented by banner advertising. In addition to the free service, Spotify also offers a premium service which is free of advertising for 99p a day or £9.95 a month. Spotify’s catalogue is now reported to be close in size to that of iTunes with thousands of new tracks coming online every month. Since its UK launch there have been issues with Spotify’s catalogue, the usual digital holdouts such as the Beatles and AC/DC have always been missing, but songs have been pulled from the playlists due to streaming right disagreements. Spotify also has the all important ‘social’ element - you can easily share playlists and songs with your friends and family. You can make a playlist, send a friend a link and within seconds they’re listening to the same mix you are.

It’s a well documented fact that the mainstream corporate music industry has been slow to embrace the digital revolution and the potential new revenue streams it offers. Instead, many of the major labels have ploughed considerable time and money into fighting illegal downloads and peer2peer sharing by pursuing legal action and filing law suits against companies and individuals, often spotty teenagers. It’s been left to innovative new entrants in the music market such as Apple with its iTunes to take the lead and now Spotify is following hot on iTunes’ heels. The concept behind Spotify isn’t revolutionary, after all we’ve been listening to free music subsidised by advertising on commercial radio for a long time. But with Spotify you are in total control of the music you listen to, you select the tracks and your very own personal jukebox is ready to rock.

Others have tried to offer similar services, for example Yahoo! Music and Pandora, but Spotify appears to be succeeding where others have failed because of the deals it has managed to secure with the major record labels, giving it access to a broad array of music. In fact, Spotify is being hailed by some as the saviour of the music business, an answer to the online piracy and illegal file sharing that the record industry claims costs them millions of pounds a year. Why bother with the time and effort of downloading music illegally when you can get the same tracks instantly on Spotify? Although you can’t actually keep the music you hear on Spotify you can listen to a track as many times as you like, so there really is little incentive to download music illegally.

Spotify is a relatively small company with big ambitions. It stepped on iTunes toes by signing a deal to sell MP3 downloads with the London based online music store 7Digital. So now you can listen to music for free and purchase songs or even entire playlists in one quick and easy step. Apple is keeping its enemy close and has an affiliate relationship with Spotify, as does Amazon. Spotify is also looking at developing other potential revenue streams including providing access to rare content such as archive radio material. Interestingly, it has recently launched its own API (Application Programming Interface), effectively opening up the innards of Spotify to third parties who can now embed Spotify's technology in a variety of gadgets: including mobile phones, TV set-top boxes and games consoles. Allowing other companies and independent developers to create services that link into Spotify would not only help the manufacturers, but also allow Spotify itself to reach more people. For example, while it's known that the company is developing an app for the iPhone, the new APIs would enable anybody to build for their choice of mobile handset.

Although I confess that I’ve now reached the age where I haven’t a clue, or indeed give two hoots about who currently occupies the No. 1 position in the charts (they do still have a top 40 don’t they?!), I’m still a big music fan. I’m now using Spotify and it is a great resource - a huge, free and instant library of wonderfully diverse music there for your listening pleasure but, and it’s an important but, only as long as you are connected to the internet. However, in a move that will undoubtedly have caused a few sweaty palms at Apple’s HQ, in May this year Spotify demonstrated an offline version of its service for the first time. Running on a Google Android mobile phone, the new “offline mode” caches playlists, turning your phone into an MP3 player with Spotify as the default music client. Playlists are instantly synced across desktop and mobile clients, and can be manipulated on either. It’s still in the development phase, with no official release date as yet, but if it takes off Spotify may well sound the death knell not only for paid for music but also MP3 players and iPods.

Spotify’s founders are hoping to launch in the USA in the near future and it will be interesting to see how profitable the company proves to be; whether the millions spent on securing publishing and streaming rights can be funded through subscriptions and advertising. Only time will tell whether Spotify really is the future of online music that will see millions of once cherished iPods go the same way as Walkmans, CD Players and ghetto blasters. I’m currently using Spotify to listen to music on the PC and purchasing the music I like from iTunes, but how long it will be before I’m handing over my iPod to my children for their history projects and how old will I feel then!