Spotify Taking Over the World of Online Music

ATHENS, Ga.-There’s no doubt that the rise of the Internet over the past decade has changed the face of American culture. While this change has created quite a stir, adaption to this new medium by many industries has not always been easy. Many sectors have found the transition bumpy and uncertain. The music business has been no exception.
Since the launch of iTunes in 2003, the online music store has been responsible for 70 percent of all online music sales, including over 6 billion songs in its six years of operation. iTunes responded to the movement of music consumers buying single tracks instead of whole CD’s.
However successful iTunes has been, it hasn’t been able to replace the importance and allure of a free product (especially when they recently increased their price from $.99 to $1.29 per song). From Ruckus to Pandora, free music services have popped up all over the nation trying to bridge the gap between music consumers and they way they purchase their music. The problem seems to be that not everyone wants to buy music online. Plenty of people are fine “renting,” or streaming music on their computers, especially when that music is free.
“Having music on my iPod or in my car is great, but what’s even better than that 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 service with a 6 million track catalogue and as of March 2009, a clientele of over 1 million members.
Members who use Spotify for free can instantly access any song in the catalogue and create/share playlists with other Spotify users. Members are only subject to minimal amounts of advertising; however, a premium subscription is available for a fee. This level of membership allows users full access to the catalogue ad-free as well as higher sound quality, travel access and exclusive offers (i.e. concert ticket lotteries, pre-releases to albums and VIP competitions).
Another recent addition to having a premium membership is the ability to have Spotify on a mobile device like an iPhone or Google’s Android software. Apple approved a free iPhone application for Spotify which allows premium users only to search for new music, temporarily store playlists when no connection is available and stream playlists.
Although Apple’s approval of the application may seem unexpected, iTunes and Spotify are not in direct competition with each other. The partnership will be a huge asset to Spotify as far as giving consumers an incentive to buy a premium membership instead of using the Spotify for free. While the benefits for Spotify may be easily understood, the motivations for 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 the University of Georgia’s Music Business Program.
Another development from Spotify is that the Web Site now sells MP3 downloads in addition to allowing users to just play songs. Currently Spotify links users to songs or albums from 7Digital (an online music store based out of London). However, Spotify is also affiliating with Amazon and iTunes.
In addition to creating headway for the music industry as an acceptable business model for the future, Spotify is also opening new roads for the promotion side of the music business. Spotify allows unsigned artists to upload their music on the Web Site for other music lovers to hear through sites like www.dittomusic.com and Record Union. Through Spotify, unknown artists can publicize themselves getting their music straight to listeners.
“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 Roma, Ga.
The idea of a free music service providing consumers with new music that would ordinarily be inaccessible combined with the explosion of social media techniques for unknown artists has the potential to create a massive shift in the music industry.
Although Spotify is not yet available in the United States, it is expected to launch here by the end of the year and join countries like the UK, Germany, France, Italy and Spain in spreading the word.
Currently, Spotify is facing licensing restrictions in the U.S. which has been impeding their launch. 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 definitely generating a lot of interest in the United States, especially with recent display of support from Apple. It shouldn’t be long until Spotify moves from Europe and begins alerting music consumers in America to a new online alternative.