Spotify, Beacon for the Music Industry

By: Blakeney Spong
New music streaming Web site offers free access to millions of songs and play lists

ATHENS, Ga.-The new online “jukebox” Spotify may be the key to successfully putting the music industry at ease in this digital age. Already blazing a trail, Spotify is registering approximately 500,000 new users daily throughout Europe, according to Rolling Stone magazine.
Since the launch of iTunes in 2003, the online music mega-store has been responsible for 70 percent of all online music sales, including over 6 billion songs in its six years of operation. Despite the company’s success, it won’t be able to compete with the allure of a free product.
From Ruckus to Pandora, free music services have popped up all over the nation trying to bridge the gap between music consumers and the way they get their music, because not everyone wants to buy it (hence the trouble with piracy in the music industry). Plenty of people would rather stream music for free on their computers.
“Having music on my iPod or in my car is great, but what’s even better is having unlimited access to music that’s free,” said Lewis Brown, a Marketing major from Nashville, Tenn.
Spotify was founded in Stockholm in 2006 and launched in the UK in 2008. This online “radio station” provides a free 6 million track catalogue and as of March 2009, a clientele of over 1 million members.
Members who use Spotify can instantly access any song in the catalogue and create/share playlists with other users. Members using Spotify for free are subject to minimal amounts of advertising; however, a premium subscription is available. This level of membership costs around $14 per month and allows users full access to the catalogue ad-free, a higher sound quality, travel access and exclusive offers.
Another advantage of a premium membership is the ability to use Spotify on an iPhone. Apple recently approved a free application that allows premium users to search for new music and stream play lists from the Web site.
The partnership will be a huge asset to Spotify as far as giving consumers an incentive to buy a premium membership instead of using it for free. Although the benefits for Spotify may be easily understood, the motivations behind Apple’s support are a little unclear.
“Spotify has got so much buzz right now that it may be the next big thing, like Twitter and Facebook. It’s worked in Europe and now it’s coming over here and I’d be willing to bet that they [Apple] got a piece of it. They see the writing on the wall. They’re in the business of selling iPhones. iTunes is a big part of their revenue, but they sell iPhones,” said Bruce Burch, director of UGA’s Music Business Program.
In addition, Spotify now sells MP3 downloads as well as allowing users to just play songs. Currently, it links users to songs or albums from 7Digital (an online music store based in London), but Spotify is also negotiating with iTunes and Amazon.
In addition to creating headway for the music industry as an acceptable business model for the future, Spotify is also opening new roads on the promotion side of the music business by allowing unsigned artists to upload their music. With help from sites like http://www.dittomusic.com/ and Record Union, unknown artists can get their music directly to listeners on Spotify.
“I’ve talked to radio stations in Atlanta before and they won’t play your music unless your signed or on the top 50 on the charts. I would use it [Spotify] because any way to get your music out there when you’re unsigned is good because you need the publicity,” said Tanna Key, a 15-year-old aspiring musician from Rome, Ga.
Spotify is not yet available in the U.S because of licensing restrictions, but is expected to launch here at the beginning of next year and join several countries across Europe. According to Burch, these restrictions probably have to do with getting record labels on board.
“Getting a major record label to sign on is difficult because everybody wants to wait and make sure it’s going to work,” Burch said.
The hype about Spotify is generating a lot of interest in the U.S, especially with the recent display of support from Apple.
“It’s a really exciting time for the music industry. Anything could happen,” said Meredith McBee, a 21-year-old student senior in the Music Business Program. “Spotify’s proof of that.”

Edited by Jessica Cole