Crunch Time for Spotify(jacquesmattheij.com)
jacquesmattheij.com
Crunch Time for Spotify
http://jacquesmattheij.com/crunch+time+for+spotify
6 comments
You raise a good point about the distinction between a music discovery service and a way to avoid having to curate your own music collection. My personal use of music streaming services (we7 in my case) is built around the latter. If I have a party at my house, it's pretty useful to plug the laptop into the stereo and let people choose music from we7 rather than me having to specifically go out and buy any song that gets played.
It sounds like Spotify are probably shooting themselves in the foot by destroying a good part of their value for a lot of their customers.
It sounds like Spotify are probably shooting themselves in the foot by destroying a good part of their value for a lot of their customers.
If their users aren't paying them money, then they're not Spotify's customers, they're the product Spotify is selling to advertisers.
Spotify's audio adverts can be really intrusive - it's definitely not something you'd want to cut in during a party.
Spotify's audio adverts can be really intrusive - it's definitely not something you'd want to cut in during a party.
As I understand the wording on the blog post, it's 5 plays ever and not 5 plays per month.
Over the years, I have had a ton of people approach me about doing various startup ideas. For some reason, 90% that are pitched related to music.
I immediately say no to any startup involving music. I know pg has the same policy now, but I've been saying it for about 10 years now, and my reasoning is a bit starker than pg's.
Basically, there are only a handful companies making good money off of music, and you aren't going to be one of them. (the labels and Apple, basically)
* This is slightly less true when you are including instrument makers, but musicians are an AWFUL market to try to sell to, since the only ones who actually make money tend to get everything free anyway through sponsorship deals. IE. musicians can't spend money, and if they can they won't anyway.
P.S. To the guys in Glastonbury I recently spoke to through email and who I know read HN, this isn't directed at you, even if it may sound like it.
I immediately say no to any startup involving music. I know pg has the same policy now, but I've been saying it for about 10 years now, and my reasoning is a bit starker than pg's.
Basically, there are only a handful companies making good money off of music, and you aren't going to be one of them. (the labels and Apple, basically)
* This is slightly less true when you are including instrument makers, but musicians are an AWFUL market to try to sell to, since the only ones who actually make money tend to get everything free anyway through sponsorship deals. IE. musicians can't spend money, and if they can they won't anyway.
P.S. To the guys in Glastonbury I recently spoke to through email and who I know read HN, this isn't directed at you, even if it may sound like it.
As a customer, paying a monthly subscription roughly on par with the price of a CD for "all you can eat" music is, I think, bloody good value.
It seems to me that Spotify are killing it.
It seems to me that Spotify are killing it.
I don't disagree with your post, but I'm having trouble seeing how it relates to mine.
I wasn't saying you can't make good or valuable music companies. I'm just saying almost none of them make a decent profit, and therefore I won't touch them.
I mean, satellite radio was basically built on talk shows.
Or Pandora, the current winner in internet radio, from their IPO filing: "The company has brought in $90.1 million in revenue as of the first three months of its 2011 fiscal year and has lost only around $300,000." (VentureBeat)
It's an industry where even the winners are failures.
I wasn't saying you can't make good or valuable music companies. I'm just saying almost none of them make a decent profit, and therefore I won't touch them.
I mean, satellite radio was basically built on talk shows.
Or Pandora, the current winner in internet radio, from their IPO filing: "The company has brought in $90.1 million in revenue as of the first three months of its 2011 fiscal year and has lost only around $300,000." (VentureBeat)
It's an industry where even the winners are failures.
There may be some confusion here, ra means "killing it" in the inverted slang sense. "Killing it" here means "laying waste to all before them," rather than "destroying their own business model."
"laying waste to all before them"
That's exactly what I meant. Thanks for the clarification.
That's exactly what I meant. Thanks for the clarification.
I don't know about anybody else, but this is exactly why I'm leery about any of these "cloud services". With my local music collection, I know that future developments are of no concern.
Another area in which this is very important is gaming - Steam has a near-monopoly on online sales of PC games, and if they were to go under, a lot of people would get screwed over. I rarely (if ever) play video games, but I've bought all the Humble Indie Bundles just to support an option that doesn't put customers at the mercy of the retailer's servers operating properly.
Another area in which this is very important is gaming - Steam has a near-monopoly on online sales of PC games, and if they were to go under, a lot of people would get screwed over. I rarely (if ever) play video games, but I've bought all the Humble Indie Bundles just to support an option that doesn't put customers at the mercy of the retailer's servers operating properly.
I see Spotify more like a radio service, albeit one I do pay for. If the radio station shuts down I find another way of listening to music. I still buy some music in addition. I dont feel I own the music in Spotify so if it went away I havent lost it... I could never afford to own that much music.
I agree with Jacques's analysis. What will be interesting to watch is the uptake rate of the paid version in countries where they have extremely widespread usage (like here in Norway.)
I'm already a paid subscriber, and gladly pay 100NOK/month for the premium service. I'd be disappointed (but not completely surprised) to find that people don't think the service is worth that.
I'm already a paid subscriber, and gladly pay 100NOK/month for the premium service. I'd be disappointed (but not completely surprised) to find that people don't think the service is worth that.
I don't find that a service for simply listening to the radio is worth paying for on a monthly basis. If I can't download it and listen to it whenever I want and wherever I want, it's not mine, and it's worth paying for.
I would happily pay a significant amount of money every month (say about £30-40) for an all-you-can-eat buffet of DRM-free downloads covering all the released music (since the beginning of recorded music) by all the major labels.
This would translate into some £480 of income from me for the recording industry, versus £0 at the moment. I'm pretty sure I'm not alone. I wonder how much money they're leaving on the table by offering inadequate products like Spotify.
I would happily pay a significant amount of money every month (say about £30-40) for an all-you-can-eat buffet of DRM-free downloads covering all the released music (since the beginning of recorded music) by all the major labels.
This would translate into some £480 of income from me for the recording industry, versus £0 at the moment. I'm pretty sure I'm not alone. I wonder how much money they're leaving on the table by offering inadequate products like Spotify.
I'm a paid subscriber and I'd like to correct what I think may be a faulty assumption (which may be due to poor wording in the original article).
Spotify does more than let you listen to the radio - they have a large catalogue of music that you can search through and play at whim.
You can also save music to your mobile device and listen to it later. If you want, you can go to a friend's house, login to Spotify on your account and then listen to your music there.
http://www.spotify.com/uk/about/features/
All this for just £10 a month! For all intents and purposes, Spotify is "all-you-can-eat" for the needs of most people. I wish they'd improve the range of tracks they have but that's somewhat beyond their control - this will always happen until the market tips enough to get certain old-world businesses on board.
Before this comment runs the risk of sounding like a hagiography, I should point out that the features for creating and sharing playlists are fairly limited and the client software is fairly basic (at least on OSX, which is the only version I've used).
Edit: Beaten to the punch by ladon86 by a couple of minutes. I should learn to type faster, or perhaps just use fewer words :-)
Spotify does more than let you listen to the radio - they have a large catalogue of music that you can search through and play at whim.
You can also save music to your mobile device and listen to it later. If you want, you can go to a friend's house, login to Spotify on your account and then listen to your music there.
http://www.spotify.com/uk/about/features/
All this for just £10 a month! For all intents and purposes, Spotify is "all-you-can-eat" for the needs of most people. I wish they'd improve the range of tracks they have but that's somewhat beyond their control - this will always happen until the market tips enough to get certain old-world businesses on board.
Before this comment runs the risk of sounding like a hagiography, I should point out that the features for creating and sharing playlists are fairly limited and the client software is fairly basic (at least on OSX, which is the only version I've used).
Edit: Beaten to the punch by ladon86 by a couple of minutes. I should learn to type faster, or perhaps just use fewer words :-)
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I happily pay Spotify €10 a month for an all-I-can-eat buffet of DRM'ed downloads, covering much of all the released music of many of the major labels. I'm certain I'm not alone.
I don't care that I'm left with nothing when they fail or change their policy so it doesn't suit me and I decide to take my money elsewhere. They offer me a convenient service. I'm not even interested in buying CD's.
I don't care that I'm left with nothing when they fail or change their policy so it doesn't suit me and I decide to take my money elsewhere. They offer me a convenient service. I'm not even interested in buying CD's.
Why would you pay for the 2nd month?
Spotify isn't a radio service, it does have a (fairly iffy) recommendation service, but it's a fundamentally a "I want to hear this track or album by this artist, there it is, click play" service.
Spotify isn't a radio service, it does have a (fairly iffy) recommendation service, but it's a fundamentally a "I want to hear this track or album by this artist, there it is, click play" service.
Why would you pay for the 2nd month?
Because my tastes change, I discover new genres and artists, artists release new music, and new artists come out.
Because my tastes change, I discover new genres and artists, artists release new music, and new artists come out.
And you'd really pay £40 a month for the ability to follow your changing tastes? I think you are in a very small subset of users if that's the case.
Absolutely.
Think about it as the equivalent of buying a measly 3 or 4 CDs a month back in pre-internet days. I don't think that's an excessive amount of music if you're a music-lover.
I would easily download much more than that each month, and would be happy to pay for an omnivore plan to match.
Think about it as the equivalent of buying a measly 3 or 4 CDs a month back in pre-internet days. I don't think that's an excessive amount of music if you're a music-lover.
I would easily download much more than that each month, and would be happy to pay for an omnivore plan to match.
If you're happy buying 3 or 4 CDs a month for £30, well nothing stops you now does it? Emusic even offer that kind of subscription package, or at least they used to.
Do you not see a risk to the company offering an unlimited download package that some (many?) would subscribe, download everything they've ever heard of, and can think of, then cancel? Or after 2 years of subscribing if they announced they were changing their model that people would do the same?
Do you not see a risk to the company offering an unlimited download package that some (many?) would subscribe, download everything they've ever heard of, and can think of, then cancel? Or after 2 years of subscribing if they announced they were changing their model that people would do the same?
When I was paying for CDs, I was paying for something tangible and worth money: the concrete delivery of a piece of plastic from the other side of the world into my hand.
Now that this is not the distribution model anymore, I am certainly not happy to pay £30 a month to get the equivalent of 3-4 CDs. Times have moved on. £30 a months should buy access to everything, not just to 3-4 CDs' worth of music.
90% of the price of CDs is distribution and packaging. Those costs are nil on the internet, and therefore the price should be adjusted accordingly (and the record labels go bankrupt). If they can evolve and start providing a better value-add service (like, maybe, a very good interface for finding and downloading music) then they might be worth something. Atm the labels are just a leech on the back of artists and the public.
Anyway, if you must sell music trac-by-track, I would consider a per-track model that costs 10% of the price currently being used - i.e. 10 cents per track. But I probably wouldn't spend as much as if I was offered an all-you-can-eat subscription.
Now that this is not the distribution model anymore, I am certainly not happy to pay £30 a month to get the equivalent of 3-4 CDs. Times have moved on. £30 a months should buy access to everything, not just to 3-4 CDs' worth of music.
90% of the price of CDs is distribution and packaging. Those costs are nil on the internet, and therefore the price should be adjusted accordingly (and the record labels go bankrupt). If they can evolve and start providing a better value-add service (like, maybe, a very good interface for finding and downloading music) then they might be worth something. Atm the labels are just a leech on the back of artists and the public.
Anyway, if you must sell music trac-by-track, I would consider a per-track model that costs 10% of the price currently being used - i.e. 10 cents per track. But I probably wouldn't spend as much as if I was offered an all-you-can-eat subscription.
90% of the price is a CD isn't distribution and packaging - an album CD in HMV at £8 costs the same to distribute and package as a CD single for sale at HMV for £2.
The vast majority of cost of producing and selling a hit album is marketing, and that cost hasn't changed significantly for the labels, at least not yet.
It's quite possible that the economics of 10 cents per track might work out, but it'll be without the major labels marketing teams.
Whether that should bother anyone, that's the real question.
The vast majority of cost of producing and selling a hit album is marketing, and that cost hasn't changed significantly for the labels, at least not yet.
It's quite possible that the economics of 10 cents per track might work out, but it'll be without the major labels marketing teams.
Whether that should bother anyone, that's the real question.
Do your tastes change significantly every month?
So, for £40 you want the ability to download every piece of music ever released and own it for ever? Once you've spent your first month downloading everything you've ever wanted, what's the incentive to re-up your subscription the following month? Are you really going to pay that subsequent fee to download a few new releases?
Not sure your model works.
Not sure your model works.
well, the model works for others: millions (or hundreds of thousands) gladly pay a monthly fee of £40 on usenet + rapidshare accounts, and i'm pretty sure most of them renew month after month
I'm pretty sure most of them aren't using rapidshare for the music alone, but the movies, tv shows, games, and porn they carry.
I'm not sure what you mean here - are you talking about access to pirated music?
Also, I'm uncertain that millions or hundreds of thousands of people really do pay £40per month for rapidshare/usenet accounts. I'd like to see some evidence for that claim.
Also, I'm uncertain that millions or hundreds of thousands of people really do pay £40per month for rapidshare/usenet accounts. I'd like to see some evidence for that claim.
>Once you've spent your first month downloading everything you've ever wanted
This only makes sense if you're talking about someone with tragically limited tastes in music. There is no way you could ever listen to "all the music you want" in a lifetime, let alone one measly month.
There is more good new music produced and released in a month than you could listen to in that month, before you even consider the entire history of recorded music that already exists.
This only makes sense if you're talking about someone with tragically limited tastes in music. There is no way you could ever listen to "all the music you want" in a lifetime, let alone one measly month.
There is more good new music produced and released in a month than you could listen to in that month, before you even consider the entire history of recorded music that already exists.
Only if you assume people will only download what they can listen to in the time allowed.
I know a few usenet/rapidshare service subscribers, they download more HD movies per month than they could watch if they sat there 24x7 watching them, never mind the amount of music they could download if they turned their attention to it.
I know a few usenet/rapidshare service subscribers, they download more HD movies per month than they could watch if they sat there 24x7 watching them, never mind the amount of music they could download if they turned their attention to it.
Actually, I disagree that there is more good music produced and released by major labels in a single month than you could ever listen to, although I liked the implied condescension of "tragically limited tastes"
And this is essentially a thought experiment - extend it out to a year, where you're downloading 24/7 and what I'm saying holds true. Paying a fixed amount for (legal) unlimited DRM free downloads isn't a model that's going to work.
And this is essentially a thought experiment - extend it out to a year, where you're downloading 24/7 and what I'm saying holds true. Paying a fixed amount for (legal) unlimited DRM free downloads isn't a model that's going to work.
There is a lot more on spotify than the major labels. And even the majors put out a lot of good music beyond what makes it into the charts.
And it doesn't make sense to consider someone downloading 24/7 because unless you're on dialup, you can download a lot more than 24 hours of music in 24 hours.
However it is clear than the value you get from spotify and similar services is very much determined by your attitudes to music. If you cast your net wide and look for gems from across all styles and niches of music, then it's easily worth it. If you just want to listen to indulge your relatively static tastes in the one or two areas of music that concern you, then its a less obvious choice.
The question is, are there enough obsessive people who are into Music in the wider sense, and have a need for on demand "random access" to any and all artists/genres, to sustain spotify? Because they are the people for whom the service makes sense. People who want to listen to the same 50-100 albums on rotation are unlikely to be persuaded by the pricing model.
PS. Yeah, "tragically limited" was a thoughtlessly flippant thing to say. Didn't mean to be so condescending. Compare it to the attitude of a hacker looking down on someone who doesn't feel the need to learn anything except Java because it "does the job" :)
And it doesn't make sense to consider someone downloading 24/7 because unless you're on dialup, you can download a lot more than 24 hours of music in 24 hours.
However it is clear than the value you get from spotify and similar services is very much determined by your attitudes to music. If you cast your net wide and look for gems from across all styles and niches of music, then it's easily worth it. If you just want to listen to indulge your relatively static tastes in the one or two areas of music that concern you, then its a less obvious choice.
The question is, are there enough obsessive people who are into Music in the wider sense, and have a need for on demand "random access" to any and all artists/genres, to sustain spotify? Because they are the people for whom the service makes sense. People who want to listen to the same 50-100 albums on rotation are unlikely to be persuaded by the pricing model.
PS. Yeah, "tragically limited" was a thoughtlessly flippant thing to say. Didn't mean to be so condescending. Compare it to the attitude of a hacker looking down on someone who doesn't feel the need to learn anything except Java because it "does the job" :)
Having lots of music does not preclude you from discovering more music that you like. Extend it to a lifetime, and in the last year I would still be downloading new music.
For new music. Sure the recording industry will feel they are getting ripped off but as the comment above says, they are getting nothing currently.
My guess is this is a requirement from the record companies for a US launch.
So, might actually be good news for Spotify - and you americans who can't access this excellent service.
So, might actually be good news for Spotify - and you americans who can't access this excellent service.
I can see myself uninstalling Spotify by the time it starts failing to play the music I want to play more often than not.
This sums it up, I think (quote from the link):
The blog ends with "Above all, this means we can continue making Spotify available to all in the long-term." which suggests this move is made out of need rather than of want and effectively that translates in to 'an advertising supported free music service is not viable'.
This sums it up, I think (quote from the link):
The blog ends with "Above all, this means we can continue making Spotify available to all in the long-term." which suggests this move is made out of need rather than of want and effectively that translates in to 'an advertising supported free music service is not viable'.
If you feel the need to listen to a track more than five times a month then that's surely an indication that it's worth chucking the artist/label ~£1 to get the MP3/FLAC. Once you you've done that you can move on to finding another new track to obsess over on spotify, with no opportunity cost.
In short, this emphasises spotify's suitability as a discovery service for new music, rather than as a way to avoid having to curate your own music collection. This was always it's strength anyway.
The problem is that spotify is probably banking on the latter use case to support their business.