What is Spotify?
Spotify offers music as a service through the internet. It is available in more than 20 countries and is launching in Singapore today. When you subscribe to Spotify, you get access to over 20 million songs (catalogues vary by country). You can listen to these songs via a variety of ways; you can stream random songs via Spotify’s radio channels, which are divided into genres like hip-hop, pop and singer-songwriter. Unlike traditional radio, you can skip songs, and like or unlike songs, which will help Spotify play more of the kinds of songs you like.
You can also go direct to songs you like by searching for them, and even listen to entire albums if they’re available. If you pay for Premium, you can even download songs for listening offline. You can collate your own playlist, or listen to others’ playlists, including playlists from musicians like Justin Timberlake. Spotify is also social; you can connect Spotify to Facebook and Twitter, share songs with your friends, as well as listen to what they’re listening.
Spotify is offering two subscription tiers in Singapore: Free gets you music on your desktop and laptop with ads. On the Premium S$9.99 plan, you can stream music on your mobile devices using Spotify’s apps, and you gain the option to download music to play offline.
By paying S$9.90 a month to listen to what you want to when you want to and share it with other friends on Spotify, you may never have to buy another album again. The local launch of Spotify seems to come with a respectable selection of songs. Beside the Western acts you’d expect like Justin Bieber, Coldplay and Jay-Z, a quick search also finds Chinese performers like Faye Wong, Girls Generation and L'Arc-en-Ciel.
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The Origins of Spotify: the Napster & BitTorrent Connections
Spotify was developed in Sweden and launched in Europe in 2008. The company was founded by Daniel Ek, who was an “early user of Napster”. According to interviews with Wired, Ek said that “before Napster, I didn’t listen to the Beatles. I didn’t listen to all the guys that are my favorite bands now.”
That drive to create a service like the defunct Napster, but legal, lead Ek to make Spotify. “The reason I started Spotify was not because of my love of music. It was because I saw an opportunity to create something that made it easier for people to do the stuff that they were already doing, but legally (source: Wired).”
Ek partnered with Ludvig Strigeus, who had created uTorrent, a leading BitTorrent client. Spotify grew rapidly after its launch, and Sean Parker, co-founder of Napster and the early president of Facebook invested an estimated US$15 million into the company. Spotify launched in the US in July of 2011, is launching today in Singapore, and today boasts over 24 million users with over 6 million paying subscribers.
Spotify - How Good is a Good Thing?
For users, especially paying subscribers, Spotify offers a bountiful buffet of seemingly unlimited music. You no longer have to pay for songs, instead you pay for access to a voluminous library of songs, a number much larger than a single device could conceivably store. However, if you ever decide to cancel your paid subscription, you return all the songs you’ve rented back to the library, leaving you with nothing after whatever you’ve paid.
It’s also unknown just how much Spotify benefits the artists, as reports are contradictory. Spotify compensates musicians based on the number of plays, and Spotify says it has already paid out US$500 million to rights holders since its launch. The International Federation of the Phonographic Industry said that in 2011 digital track and album sales grew 19 percent, crediting services like Spotify with helping the US music market in a way which, supposedly, does not cannibalise digital sales.
Recently, the Recording Industry Association of America (RIAA) said in a report that industry revenues from digital formats have continued to grow, “driven by large increases in revenues through what can broadly be referred to as ‘access models’” like Spotify.
Do the Artists You Love Get Paid Enough?
But critics have also been vocal about Spotify and music streaming services in general. In 2011, NPD Group and NARM (the Music Business Association) conducted a study which said that streaming music is damaging to record sales. That report caused STHoldings to withdraw all of its music content, over 200 labels’ worth, from streaming services like Spotify. In the same year, independent label Projekt Records’ founder Sam Rosenthal claimed that Spotify paid Projekt US$0.0013 per stream, and that Spotify was not a service in which “artists are fairly compensated for their creations.”
David McCandless, an independent journalist, released an infographic which said that in order to earn a US monthly minimum wage of US$1,160, an artist would need over four million plays per month of a song, compared to selling 12,399 of a song on iTunes. Some major acts like Coldplay, Adele and Taylor had refused to distribute their songs through Spotify and other subscription services. Bob Dylan pulled his back catalogue from Spotify in 2009. However, it’s worth noting that these artists are all now on Spotify.
According to The Verge, Spotify is trying to negotiate for substantial price breaks from the music labels. Apparently, artists have received less in royalty checks from Spotify than from other music services like iTunes. According to The New York Post, Spotify may be paying up to 35 cents per 100 song plays, more than the 12 cents per 100 songs paid by rival service Pandora.
However, the artists' pay woes not be all Spotify’s fault. Charles Caldas, CEO of Merlin, which represents over 10,000 independent labels, says that Spotify doesn’t pay artists directly, Spotify pays the labels, and it’s up to the labels to distribute the payments to its artists. According to Caldas, Spotify has been good to his labels, payouts to his 10,000-plus indie labels rose 250 percent from 2011 to 2012, and he sees “consistent, ongoing growth on revenue per user, revenue per stream, and the total revenue the service brings.”
We're All Cowboys on the New Digital Music Frontier
With the conflicting sources, we can’t say for sure how Spotify does or doesn’t benefit the music industry. One thing's for sure, digital music streaming and downloading as a legal business is still in a nascent business, and it’s a wild wild west of possibilities as everyone tries to figure out a way where artists can give and listeners can get music easily at good prices for everyone.
If the music industry does earn a pittance from Spotify compared to what it used to earn through CD sales, it’s still more than the nothing they would gain from piracy. However, one can easily see how services like Spotify drive the commoditization of music, which isn't good news for musicians. If there's one way subscription services like Spotify could help music sales, it might be in the way it helps users discover new artists, through recommendations, shares and radio, and then buy the tracks to own. One thing's for sure, the arrival of Spotify and Apple’s iTunes Music Store in Singapore makes it easier for listeners to find and legally download more music than before.