
Spotify Said to Retaliate Against Artists with Apple Exclusives - taylorbuley
http://www.bloomberg.com/news/articles/2016-08-26/spotify-said-to-retaliate-against-artists-with-apple-exclusives
======
BinaryIdiot
So Apple has enough money coming in from other businesses that, if they want
to (and maybe they do), they can simply operate their Apple Music service at a
loss. Forever. Spotify can't do that so how do you combat against Apple, one
of your biggest competitors?

Burying in the search rankings and not being featured doesn't seem like a good
way to handle it. If those artists are among people's favorites if they can't
find them as easily on Spotify AND if they can get exclusives with Apple, why
wouldn't they just jump ship to Apple Music?

Obviously I don't understand all of the nuances of the music business so I
could be completely off base here but it feels like, to me, this would have
the opposite affect that they intend.

~~~
bogomipz
"So Apple has enough money coming in from other businesses that, if they want
to (and maybe they do), they can simply operate their Apple Music service at a
loss. Forever. Spotify can't do that ..."

But Spotify can and is also operating at a loss. They are just doing it with
VC money instead of their own. The numbers for 2015 were a loss of almost 200
million dollars!

~~~
aroman
That VC money is given to Spotify on the expectation that eventually Spotify
will _stop_ operating at a loss. Otherwise there is no reason to give them
money at all.

If and when that expectation no longer holds, the money will stop.

~~~
x0x0
But what, exactly, does Spotify bring to the table that justifies more than a
couple of percent operating fee? They don't own the content; they're just
middlemen. The labels / rights holders can continually raise their prices to
just below (or perhaps above, if VCs want to subsidize forever) Spotify's
income.

Spotify's app works at best ok (I'm on android). But even a good app plus
recommendations probably gets you amazon-sized margins.

~~~
nicky0
Well I guess nobody would mind if Spotify goes bust then.

------
IBM
Spotify is a money losing operation that artists already criticize heavily
because they make pennies from it (because most users are on the free tier and
ad revenue is much smaller than paid subscriptions)[1]. They have deep
pocketed competitors for whom music represents an ancillary business. They're
on month to month contracts with the major labels who want them to match Apple
Music's higher cut [2].

Usually you take the stick over carrot approach when you have some leverage.

[1] [https://www.theguardian.com/technology/2015/aug/04/taylor-
sw...](https://www.theguardian.com/technology/2015/aug/04/taylor-swift-bad-
blood-spotify-streaming-music)

[2] [http://www.musicbusinessworldwide.com/spotify-contract-
three...](http://www.musicbusinessworldwide.com/spotify-contract-three-major-
labels-wants-pay-less/)

~~~
on_and_off
From what I know of the market, most of the money paid to music services goes
to paying the contracts. The main issue is that the labels are the ones which
get paid the lion's share, not the music service or the artist.

~~~
IBM
Which is why artists like doing exclusives with Apple.

[https://medium.com/@sdotglass/apple-music-
exclusives-2d5b5ed...](https://medium.com/@sdotglass/apple-music-
exclusives-2d5b5ed3ac4f#.9qi2941ii)

~~~
dogma1138
I don't see why if an artist can publish directly on Apple Music they can't do
it on Spotify.

Artists are usually locked by their labels with pretty bad contracts that
prevent them from doing anything else on the side. Labels often even can even
get the majority of the revenue from live performances.

~~~
bogomipz
Publishing directly is the Tidal model and it really should be the future as
it benefits the artist and the streaming provider and positions the record
label as the middle man that it is.

I am not aware of any artists that "publish direct" to Apple Music. The reason
that is a problem for a Spotify is because that is "biting the hand that
feeds."

If you start encouraging artists to deal directly to you the streaming
company, you can rest assured that when it comes time to renegotiate your
licensing deal with the record labels the terms will not be very favorable or
at least not as favorable as they were previously.

You mentioned that "Labels often even get the majority of revenue from live
performances."

I believe what you are referring to is a "360 deal" I think these are largely
the domain of the only biggest artists in the world. I could be wrong though.

[https://www.thebalance.com/how-360-deals-in-the-music-
indust...](https://www.thebalance.com/how-360-deals-in-the-music-industry-
work-2460343)

------
the_mitsuhiko
Lots of people at this point basically ignore music unless it's on Spotify and
fall back to youtube. I don't think anyone picks up Apple Music because of
exclusives. Mostly it's a question of what platform people prefer.

I'm super happy apple music exists because it puts some movement into the
space. Before it there was no real competition to Spotify.

~~~
BinaryIdiot
> Before it there was no real competition to Spotify.

What about Google Music (or is it Google Play Music or just Play Music or just
Play under a music category? ugh)? They were earlier and have been really good
especially lately. Their initial iOS app was awful but I heard it has
improved. There is also Groove music (which I guess is now XBox music?) but
the Apps are awful for it. I got a Groove music subscription for the heavily
discounted black friday sale and stopped using it after a few weeks simply
because the apps are all absolutely _horrific_.

~~~
dingo_bat
Play music has no desktop client so it's not even worth considering. I think
apple music and Spotify are both very nice. The android apps of both are
particularly good and both have acceptable desktop clients.

~~~
dragonwriter
> Play music has no desktop client so it's not even worth considering.

It has no first-party native desktop client, but...so, what, really? Its
streaming content from the internet _anyway_ , so I can't really see what the
problem is with using a web client as the first-party desktop client.

(OTOH, there is at least one third-party non-web desktop client for it.)

~~~
Tiktaalik
If you have many windows and tabs open it's super annoying to track down the
one with the music player on it. Much easier to Apple-Tab to an app.

~~~
parthdesai
Eh just open play music in a new browser window and only use it for music?

~~~
dingo_bat
Eh just release a proper native client if you want to compete? I don't
understand why people would prefer a Web client over native. Tell me one
advantage. For the user.

~~~
kaishiro
Simple. I don't need to install another app.

~~~
dingo_bat
Installing is a one time, one click thing. Think of it as opening another web
app, except you have to do it only once :)

~~~
kaishiro
And this gets me absolutely nothing extra over the web app.

~~~
dingo_bat
Nothing except better performance, better looks, better smoother playback,
more features, offline playback, music key shortcuts, etc etc.

~~~
kaishiro
Performance is great, looks are subjective, and none of your other point are
relevant to me. Like I said, there's literally nothing it gets me. Clearly
it's not the right solution for you, and that's a bummer - because I love it :
)

~~~
dingo_bat
It's not about specific users. It's about the user base in general. A native
app has many advantages that a user may like or may not care about. On the
other hand a Web app has one advantage, not needing to install it. In my
opinion, people in general would care much more about having a lot of options
and features even if they have to go through the extra click needed for
installation.

One way to check what most users care for is to look at subscription numbers.
And I couldn't find a reliable source for that. So I guess our discussion is
pending until we see user numbers.

~~~
kaishiro
Yeah, I get what you're saying. I just don't agree. I've never thought that a
native app was "missing" \- I never thought about it at all until it was
brought up in this thread.

And for me, it's not at all about the user base - it's about a specific user -
me. If it's not the right service for you because there's no native app
luckily you have alternatives and can move on. I think it's an awesome service
for 10 bucks a month.

------
zaidf
Anyone else think Apple is fighting a petty war? Spotify is a solid product
and instead of spending energy, money and time fighting them, they could
acquire them and take on more ambitious fights.

~~~
Gorbzel
Or they could compete in the marketplace w/ a better product, an integrated
product strategy, and a long term understanding of the market and talent. In
doing so, they deliver shareholder value without burning unnecessary cash.

Oh look! They're doing exactly that with exclusives.

~~~
zaidf
Exclusives provide a monopoly of sorts to Apple by removing choices for
consumer. That makes exclusives a _bad_ thing for the consumers and the
market.

~~~
yardie
It works both way. The producers want to be paid for their work and they've
said so many times, in uncertain words. Spotify is still at the point that
they rely on new signups at the free tier. Apple doesn't do free, they pay
better, and they are willing to give artists the white glove treatment.

As a listener you have a choice of pay now for access or wait until it's
streaming everywhere else.

~~~
zaidf
I get that artists want to make more money but at the end of the day, that is
simply a function of the _total_ pot size and the money that has to be spent
to get a pot that size.

Spotify, so far, has been losing money. Overall, monetizing music is just a
very hard business. I feel that point is often missed by artists who want to
put the blame on Spotify as if Spotify is sitting on billions in profits that
could go to the artists. Apple temporarily enabling a _few_ artists to make
some extra money doesn't change the fact that music is a very hard business to
make money in--as much for the broadcasters like Spotify as for the artist.

------
bogomipz
So Spotify is penalizing artists who opt to do an exclusive with a company
whose business model doesn't give their music away for free? That just seems
wrong.

~~~
lostlogin
It's hard to see how this will help them? The Taylor Swift moment may be
coming to Spotify.

------
marcoperaza
I get a bad feeling about everyone in this space operating at a massive loss
in an attempt to force the competition out of business by attrition. It seems
like the domestic equivalent of dumping. I'm not informed enough to make a
strong judgment on it, but it doesn't seem like healthy competition.

~~~
vlozko
But is Apple Music operating at a loss, though? Doing so is not their modus
operandi. They don't have a free tier and the only time they're not making
money is during the one month trial period. On top of that, they actually do
pay more to artists/labels.

~~~
sushid
Well, it's a three month trial and they pay the musicians during that time.

------
Shoop
Do people actually take exclusives into account that much when picking a
streaming service? It seems to me like the biggest differentiating factors
would be price and familiarity, as long as the services in question had a
reasonable amount of the content one wanted.

~~~
burkaman
Exclusives are just a good way to get people to try out your service. It works
best when someone doesn't already have a streaming subscription, and their
favorite artist releases an album exclusively somewhere. You sign up to hear
the album, you like the service, you decide to stick with it.

~~~
cwal37
With timed exclusives they can also capture some amount of revenue from
conversion of free trial users into "forgot to unsubscribe" users.

They got me with Coloring Book a few months ago. It wasn't available
elsewhere, so I signed up for the free trial. Well before the free trial was
over Coloring Book appeared on Spotify (my preferred platform). I prompt
forgot about Apple Music until I saw a bill in my inbox. I then couldn't
figure out how to unsub without googling the process, it's certainly not
readily available as an option in-app (although that just might be the way
Apple sometimes tends to obfuscate through streamlining).

~~~
lostlogin
The unsubscribing process is truely awful. I'd try them again as rumour has it
they have got a lot better, but importing Spotify playlists wasn't possible
early on. I'll have to look again to see if that's solved.

------
corndoge
Subscription streaming considered harmful

------
philtar
Isn't competition great?

~~~
johansch
Exclusives are bad for consumers.

