November 5, 2008

Is Spotify the model?

Have we now seen a shift, or at least an approach to shift, in the music industry by some recent activity? From using their IP in a protective way to actually understand the preferences of the new economy and rise above the physical carriers of music.

Spotify opened up to the public about a month ago and has since then received excited reviews. The service builds on either an ad based model or a premium monthly subscription model. Both models have been around for quite some time but the music industry has not yet really embraced them in a good way.

Earlier attempts to stop piracy with lawsuits, drm and other protective measures have obviously not been fruitful since there is almost everything you want on for example the Pirate Bay. To offer downloadable tracks for $1 each is way too much for something which is, although illegal, readily available for free.

Providing full access to almost all songs and still make money on it is a good deal for both the users and the rights holders.

Two of the main obstacles for Spotify are that they do not provide “all” music and that you need internet access. Sure, this will probably be solved in the future. Adding more content to the service must be one of the top priorities for the company. The access problem might be harder to overcome; even though it runs on 3G connection you hardly have your computer with you when running… I do assume the service will be available on mobile devices as well in the future.

The mobile market is already starting to be explored by the large manufacturers offering different deals where the handsets are bundled with music. Nokia’s Comes With Music offer is one of them and Sony Ericsson have similar deals. The device to carry the service is for me of less importance. But the breadth in the offerings of similar services will probably establish an acceptance for the model, both on the consumer side and more important on the rights holder’s side.

We are getting more and more used to that access of information is offered to us, not one at a time but instead unlimited for a specified time. This will bring new revenue models to us, either they are ad based, prepaid or in some other innovative way. We are still in the start of the new economy of access, some have come further and some are just beginning. But the main point is that you cannot any longer stay in the model of providing goods one by one. We are used to choice and instant access and will find the best and most convenient way to get it.

Perhaps Spotify will be a good step on the way.

Johan Örneblad

4 comments:

  1. Another thing I have learned to enjoy with Spotify is that all users have access to the same songs in contrast with for instance iTunes. This enables innovative ways of using and consuming music, for instance through collaborative playlists. When giving this a second thought, you derive in that it is all about having a new way of handling music related IPRs.

    Great post!

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  2. I agree, Spotify really steps up the legal access to music; It's been our main music provider in our studio since the start of the year (if we're not finding new music via Last.fm).

    Wrote this post re: my music/connectivity hope for 2009 in mid-december... Many of the features I was hoping for are actually available Spotify (which I didn't discover till early Jan). But I also muse on the reason to actually 'own' music anymore as mobile connectivity becomes more common.

    Can you direct me to any explanation of Spotiy's business model?

    Thanks

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  3. @Miles Langley, look under the label Spotify, where i have written some more posts. Especially this one http://tinyurl.com/ck76k5 .

    ReplyDelete

 
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