Apr 15, 2011
Spotify was never going to survive as a completely “free”, ad-supported, service, hence the push to sell subscriptions and the new limits on free listening.
Spotify was never going to sell enough subscriptions as long as the same service was available for free, albeit with the occasional ad.
The major record companies — Warner, Universal, Sony and EMI — have come to the same conclusion; it is they, after all, who own the largest stake in Spotify.
Even if Spotify does eventually turn a profit — which I doubt — the lion’s share will continue to go to the four majors; artists will continue to get a pittance.
Artists will rebel and remove their music — where contracts allow — making Spotify even less commercially viable.
Spotify was never an antidote to “piracy”, ie illicit downloading and file sharing. In fact by providing music at no cost to the listener, it has legitimised the idea that music should be free.¹ Hearing and liking a record on the web for free is hardly going to deter anyone from subsequently downloading the same song(s) to copy into iTunes and onto iPods and iPhones.
Spotify will never launch in the US in its current form; if it does, the majors might as well start selling off their assets before it’s too late.
Spotify shows there is a huge market for digital music, provided the price, quality, ease-of-use and accessibility are right. No single digital music store meets all those requirements. iTunes comes closest, but the prices that the majors insist on are too high. Unfortunately for the music industry, the precedence that Spotify has set means that any price may be too high.
¹ In that sense, it’s possibly the second biggest mistake the music industry ever made. The first was failing to embrace downloading and file sharing before it was too late, preferring hugely expensive litigation that has had no impact on either.