

The Great Spotify Mystery - dsingleton
http://www.theregister.co.uk/2009/05/18/spotify/

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swombat
For those who don't know, Phorm, from Wikipedia:

Phorm, formerly known as 121Media, is a Delaware, United States-based digital
technology company known for its advertising software. Founded in 2002, the
company originally distributed programs that were considered spyware, from
which they made millions of dollars in revenue. It has since stopped
distributing those programs after complaints from groups in the United States
and Canada, and announced it was talking with several United Kingdom Internet
service providers (ISPs) to deliver targeted advertising based on the websites
that users visit.

<http://en.wikipedia.org/wiki/Phorm>

The article implies that Spotify will essentially turn into something similar
to survive.

~~~
ErrantX
(Not to get off topic but...) I do find it amusing that there is SUCH an
outcry over phorm (again, not passign judgement either way, just observing)
and yet when companies do something like this hardly anyone is bothered or
notices...

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jerf
Sometimes I think that the only way there will be a music industry is for the
current one to go ahead and totally collapse, and then for the doomsday
scenario to actually occur: For some reasonably value of "good music", there
really isn't any more, for some large number of people's definitions of "good
music". Only then would there be some real pressure to figure out how to make
some money model work in the face of "free". The industry makes noises about
how necessary they are, but "we" as a whole clearly don't believe them, and
the only way they can prove they are right is to stop.

Of course, the music industry is stuck, in that it's very easy to make and
distribute music. It's a common hobby, and has been for decades, and just gets
cheaper and cheaper.

Maybe the movie industry could pull this off; while movies will continue to
get easier and easier, I doubt a "summer blockbuster" will ever get as easy as
music is now, if for no other reason than the fact that a five minute song is
adequate but a "full" movie is an hour and a half, and each minute is
intrinsically harder.

What if there isn't actually any way to monetize these industries? Should
anything be done about that? What should, and what _could_ , be done? I don't
think going all draconian on copyright is worth it for society (the value of
the movie industry is not infinite and it's distinctly less than free speech
and freedom in general, no matter how they feel), but are there any other
options? Because let's get real, we're not going to donate or micropay our way
to "Star Trek" or "Terminator 4".

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ThomPete
For some reason it feels like that article completely misses the point.

If the record industry own 30% then they can get access to statistics then
they are able to much better target what music to push.

That's just one place that spotify allows for return on investment.

But the biggest problem with the claims is simply this.

The article states that if no one can make money on music then no one will
invest in music making.

That's purely and utter nonsense. Art is created DESPITE there being no money
in it, further more the artist can instead make good money on live concerts
because they have reached a much higher fan-base.

Don't blame spotify for the record industries lack of imagination. Actually
blame the record industry for existing at all at this day. Who really needs
them.

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AndrewDucker
You get interrupted every fifteen minutes or so by an advert - surely they
make money from that?

The article completely misses this...

~~~
uggedal
The ads are localized. Here in Norway I tend to get an ad or two (excluding
the user feedback) during a 7 hour workday.

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dxjones
How can a person in Canada "simulate" an IP address seeming to originate in
the UK to get access to Spotify? It currently rejects visitors from Canada.

~~~
ErrantX
(Hey, guys. Downvoting a genuine question is a bit cruel!)

They can use a proxy or similar so "traffic" goes through a server in the UK
first.

~~~
dxjones
Thanks for the save! I hate to see my karma erode.

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daleharvey
spotify not being able to monetize is a joke, they are in the position to
completely dominate the market, and launched from day one (I believe, if not
at least very early) with media subscriptions.

media subscriptions can make a lot of money, spotify are the first with an
application that could pretty much kill physical media sales, if you replace
all that market, thats a hefty bunch of cash.

micropayments, people still want to own their music, have it backed up, play
it on their mp3 player, I believe this is in the works, if it happens, then
they have all of itunes money.

advertising / merchandising / ticket sales, if you become the home of music to
most people, then you pocket pretty well here.

They still have a bit to go, I am hoping they come up with a better way of
transitioning free customers to subscribers than bombarding them with ads, but
from what ive seen that looks like the strategy, people dont need a lot of
convincing to upgrade their accounts because the service is so good.

their mechanisms for finding music, the artists radios suck, however they have
a fundamental change in the way people can find new music because... sharing
playlists actually works, drownedinsound / pitchfork / my friends with good
taste can all make playlists and share them with me, thats a million times
better than some dodgy collaborative filtering.

Their social aspects are pretty non existant, but thats very easily added,
they are new and they have done the hard ground work and passed with flying
colours.

They dont have all the music in the world, but they have a lot and its only
going to grow, any limitations on artists are purely down to it being new and
needing some more traction for labels to understand they dont hae a choice.

The music industry has been faltering time after time to try and keep people
paying for music, spotify from what Ive seen has the chance to completely own
the new music buying market.

~~~
ralphc
I don't think they should plan on too many premium subscriptions in the U.S.,
Napster does this now, and they even recently went to $5 a month, and you
don't hear too much about them. I think anything "youth-oriented" (music,
Facebook) will need to live or die on ads because the kids don't have credit
cards and don't want to ask their parents to pay for this, especially if the
parents know they can "get it for free".

~~~
daleharvey
I dont think media subscriptions are a dead end, people pay £50 a month to
watch some tv, I would be very surprised if people wouldnt shell out £10 a
month to listen to whatever music they wanted.

Its just a problem that hasnt been solved well yet.

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daveying99
So, maybe the free UK version of Spotify provides no reason to upgrade. But I
can tell you that the Swedish version is getting on a lot of people's nerves.
And many of those people are seriously thinking to upgrade.

\- First, there are plenty of commercial ads, the stuff that used to run on
the radios years ago. Cheesy.

\- Second, they fill up ad inventory with non-profits ads. So for example the
ad about safe sex that goes something like: "everyone loves music, especially
in the bedroom".

\- Then they have ads from artists promoting their albums and telling you that
if you upgrade, you get the single 1 week early.

\- Also, you have ads urging people to call in and leave a fans voice mail.

\- And finally Spotify plays the voice messages from people to tell you how
much they like it and how much they love the premium version.

In summary, Spotify is clearly playing a carrots & stick game to get people to
subscribe - the carrot being the social networking features they want to
launch, the ability to create playlists, etc.

And I can clearly imagine how the company is bringing the stick strategy to
the UK soon.

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ErrantX
I think one of the major problems is that it's hard to use. I struggle to find
songs or artists on there - and it seems like there is no easy way to browse
about and find suggestions etc. They could lear a lot from Last.fm's way of
doing all that.

Plus the "radio" stations are useless - set it to metal and you get 90's
punk......

So, I'd say their main problem is a poor product :)

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ashleyw
It isn't that bad, I definitely wouldn't call it a "poor product".

The radio feature is next to useless, yes, and in terms of finding new stuff,
it's not great; however the pros (high quality music, practically zero
buffering, and everything for free) vastly outweigh the cons.

I'm hoping they do find a way to monetize the free plan, because I for one
love the service, and happily pay for it (even though the paid subscription
offers basically nothing more over the free plan, which seems like a bit of a
mistake if you ask me)

~~~
ErrantX
ok not poor (your right that was unfair). I think "clunky" is better then.
Your correct I cant fault the actual music playback.

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brkumar
Arctic startup has a go at success of Spotify and what it could mean to the
future of iTunes.

[http://www.arcticstartup.com/2009/05/12/the-future-of-
spotif...](http://www.arcticstartup.com/2009/05/12/the-future-of-spotify-and-
its-competition/)

IMO, Spotify's popularity means that they're already a prime acquisition
target.

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dsingleton
There's an interesting comment about "passing information back to record
labels" especially given: "It was stated that the labels own 30 per cent of
Spotify through equity investments. It may be higher."

I'm not implying it's some big conspiracy, just that keeping user data private
when you're (part) owned by the companies a lot of your users are scared of is
_hard_.

~~~
ThomPete
The record industry have used .torrents to track. Don't seem where the
conspiracy should be.

It makes good sense they use that information to know what artists to push and
where.

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toolio
I am using VPN to stimulate UK address in Manchester (from Brazil) and have
not heard one ad in the two weeks I have been using Spotify. At the moment I
have been listening for more than three hours straight, and still not one ad.
My wife is using a similar setup and she has not heard one ad. I actually want
to hear one so I can believe they exist :)

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ZeroGravitas
Call me cynical but isn't the music industry famous for business ventures that
don't make any money. They just ensure they get their cut in advance, and cook
the books if necessary to make sure there's nothing left for the artists to
get a percentage of.

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tvon
"Acquiring it may not be pleasant: doing so may help support a neo-Nazi with a
grudge."

What? Is there some news story this is referencing that I missed?

~~~
ZeroGravitas
Took me a couple of reads to understand that too, I thought they were talking
about the Music companies buying into Spotify.

It actually means that downloaders getting music illegally from The Pirate
Bay, may be (via ad revenue) lining the pockets of a backer who has links to
far-right groups in Sweden:

<http://www.theregister.co.uk/2009/02/26/pirate_bay_neo_nazi/>

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pclark
I was told Spotify pays _per play_ for music licensing. This is interesting
because it means as Spotify grows at a crazy rate, so do their costs.

