Spotify is a music streaming service available in Western Europe created by Swedes Daniel Ek and Martin Lorentzon. Spotify’s big claim is that it offers free music in the form of free accounts supported by visual and radio-style advertising, there are approximately 9 million users of the free service. Spotify also boasts to have 1 million paying subscribers, paying subscribers do not get hassled by ads, can stream at higher a bitrate, access music offline and also gain access to Spotify through their smartphones.
Spotify have just announced that they are cutting back on the free service by half. Users of the free service will be restricted to 10 hours per month reduced from 20, and will only be allowed to listen to the same song 5 times, starting from May.
To see exactly what the Spotify team had to say click here to read their blog announcement. At the beginning of the announcement the Spotify team sounds all enthusiastic about its free service ‘People are listening to more music and from a wider range of artists than ever before, and are giving up on piracy, which is exactly what we hoped would happen. So it’s vital that we continue offering an on-demand free service to you and millions more like you,’
All of that good intent gets thrown out the window when they write ‘For anyone who thinks they might reach these limits, we hope you’ll consider checking out our Limited and Premium service…we have a 7-day free trial for Spotify Premium.’ This looks like selling out to me, most fans of Spotify who have put up with advertising to use its free service are shocked and upset. The first response to the post is “So long Spotify. It was nice nowing you. Guess I’ll go back to pirating music again then.” It is a classic move, hook people in with a free service, then change the rules of the game to make a bag load of money – isn’t ad revenue and 1 million paying subscribers enough?
Apparently not if they want to take their service worldwide – this is the accountants talking not the creative consultants. According to the experts Spotify’s long-term profitability depends on users switching to the premium services and accessing music through their smartphones. The revenues from ad supported free music just aren’t sustainable for future business due to the heavy fees demanded by the music industry. The record labels charge 1p per play of their songs, the record labels don’t like having a free service around but it’s better than piracy. The tech mantra ‘the future is mobile’ exists for Spotify too, if they can corner the mobile music scene they can make a lot and I mean ‘a lot’ money. As streaming gets faster on smartphones having access to a service like Spotify basically means you can throw away your iPod and access the world’s music in a instance. Talking about how many Gigabytes is your iPod will become irrelevant, it will be more like, what service do you use to access all the music in the world?
The downloading music scene does need to be rationalized; there must be a happy medium between the overpriced CDs in shops and pirating music for free of the net. Spotify offers this medium and I’m sure it is here to stay; the ads based system provides the stage for a best of both worlds. The problem here is that the VC companies have got their claws into Spotify; once the investment comes the next step is to double profits and to reduce the quality of the service. I can understand why music can’t be free, but I really do understand why Spotify users will be very angry now.