I have been away. Now I’m back. And like everyone else I should be playing Portal 2 so that I can get my review face on. However, I would instead like to talk about one of the best services of the last three years and how we are all terrible people.
Spotify is one of the biggest success stories of the app-based web. It burst on to the scene just a few short months after the original opening of the first app store -Apple’s, of course – in July 2008, and a few weeks before Android got theirs online. At that time, there were only about 7,000 apps on the market; most of them stubby, nascent things that had been tumbled into the public domain at short notice and would die unloved and unused.
And along came Spotify.
True, the actual mobile software would not be released until September 2009, but by that point they were already on a roll, able to concentrate on what makes the mesh-like app ecosystem such a strong offering: doing one specific thing very, very well.
Spotify made the only comparable offerings, US service Pandora Radio and the UK’s last.fm, look like child’s play, and those aren’t even really music platforms. It had great software, great streaming, and a great offer – as much free, high quality music as you liked, in exchange to listening to a 30 second advert every 20-30 minutes. Who could say no? With a brutally focused business model, intelligent negotiation of label deals and unflinching willingness to play the long game, Spotify absorbed the pain of millions of gigabytes of free data transfer to concentrate on perfecting its offering. By March 2010, it had 320,000 members and was starting to claw in revenue. At the same time a year later, it had more than doubled to 1,000,000.
And then it threw everyone for a loop.
From a great article on TechDigest:
“This smacks of pure greed,” said one user going by the name of goodbye_spotify.
“I don’t think you could have found a better way to alienate your users even if you had deliberately set out to do so. There’s no way I could ever consider upgrading to a premium account now. I’ll just stick with my open account until I run out of free plays or further restrictions like these make it completely unusable. Thanks. It was fun while it lasted.”
It goes on to say “It’s an attitude shared by many, but frankly they’re missing the point”. This is absolutely true.
It’s kind of hilarious that some people are accusing Spotify of trying to subtly, slowly shift to a model that completely phases out the free option altogether. Yes! Of course! After taking losses of millions of dollars keeping the service free, they must surely now plan to phase out their best USP, their golden ticket, the basis of their entire business model.
No, of course they won’t. They’re not going to do what Best Buy did to the now-emasculated Napster. Even if several years down the line (perhaps after an acquisition) the noose tightens, it’s tin-foil stuff to say that they’re thinking that way right now.
No, Spotify has its reasons, which mostly consist of possible Google tie-ups and trying to ameliorate the suits in their ongoing efforts to get a foothold in the USmarket. It’s pedantic and complex and seems staggeringly out of touch in a world where something like Spotify can even exist, but that’s the music industry for you.
What is important, I think, is to realise that the negative response is – to put it mildly – naive. US hand-wringing aside, there are too many expenses to account for. You can’t serve however many million songs – 3.6m in 2009 is the only figure I can find, and it’s safe to assume that number has grown – to a million people and counting without incurring costs. Spotify was never going to be able to keep its offering so good indefinitely.
Digital society has had for a time this utopia of ‘free’ music which has accustomed us to the idea that we don’t need to pay. I’m not going to wade into that, but the net effect is that the purchasing culture – and listening behaviour – has changed sufficiently for the market to be unable to force it back. Instead, the market had to adapt. Slowly, very slowly, it has. We’re about to reach a point where costs have been driven down and standards been driven up enough to make subscription models fall within our altered ideas of what is a fair price:
iTunes track downloads at roughly 79p a go, when compared to the £9.99 a month cost for unlimited access to over 6 million songs with Spotify, now appears incredibly poor value for money.
Spotify will keep that – still amazing, let’s be honest – free service as a powerful means of attracting new users for conversion, but the luxuries enjoyed for the first few years were never going to last. Because of our own adjusted valuation of music, and our flat recalcitrance to actually pay, the company had to suck it up and take the hurt to pile on its userbase. The pitiful death of Napster showed exactly what would have laid in store if they had tried to charge from the off.
Instead, Spotify realized that people weren’t ready to go back just yet. They wanted their music to flow. In a digital anarchy, everything was up for grabs, and music exposure has proliferated far beyond the curated libraries of a mere decade ago. Where someone may have had fifty tracks before, it’s now fifty thousand. But we’re coming round. We’re calming down. We’re ready to pay again – but only at a price we find acceptable. And, finally, we are. ABI reckons we’re looking at 161 million digital music subscribers in 2016, which is a growth rate of 95%. The model has changed.
You can’t blame Spotify for the return of the price of music. Spotify was just smart enough to wait.