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Friday
Mar162012

3 Reasons Spotify May Never Be the OS of Music

So, most of you are probably aware of the recent changes that Spotify has made in regards to opening up its platform for developers to build apps upon. In March, the social music service will be opening up an app store to help app developers get paid for their hard work. Last week, I read a really interesting article on the Guardian titled Spotify: ‘We have to turn ourselves into the OS of music’.

As a heavy user of the free version of Spotify :) , I really love what they are doing for social music but there are few major problems that I feel will prevent it from becoming the OS of music.

The first, being its relationship with Facebook which forces users to have to login via a Facebook account. Even though just about everybody that’s breathing uses Facebook, people are still a little apprehensive about sharing their listening habits and having to login in to one system to use another system. And, while some may argue you can easily switch to private listening mode, it still will continue turn a lot of people away. With VEVO’s new deal with Facebook, it requires the same process and this is the reason why I won’t be using VEVO as much as I have in the past.

This seems to be the way that Facebook does business, all or nothing. If Spotify is to ever to become the OS of Music, it must separate from Facebook or create a version that doesn’t require users to login via Facebook. Jay-Z had an album to come out a while ago called “The Blueprint 2: The Gift and The Curse,” and in my opinion an all in deal with Facebook is definitely a ‘gift and a curse.’

Second, Spotify and the recording industry must figure out a way to compensate artists more fairly for streaming music play. Major record labels love Spotify, because they own shares and the artists, well…While people argue that listening to streaming music increases physical album sales, I have been using Spotify since it launched in the U.S. and I have yet to purchase one album because I heard it on Spotify.

Third, services like Itunes and Rhapsody still are the most dominant digital music services in the U.S. and they both operate independently of Facebook. Both services will continue challenge Spotify as they are adding more social features. Rhapsody recently topped 1 million paying subscribers making it the most popular premium music service in the U.S. Itunes failed to get a warm response from Ping, but in my opinion they will leverage their mobile platform to offer a socially integrated service that will challenge Spotify’s dominance in the social music spehere.

Reader Comments (8)

Yep, that 2nd point hit the nail on the head. That's 95% of it. As long as iTunes pays us more than Spotify does then it'll always be more powerful. The revenue share keeps content creators flowing with new content (and new visitors).

March 16 | Unregistered CommenterWalt Ribeiro

Before their US launch, Spotify did not require a Facebook login. It seems to me like the deal they struck was a good one. There are many more potential users on Facebook for them right now, than there are lost users who won't sign up because of Facebook Connect. If Spotify's user growth levels off by the time their deal with Facebook expires, they already have the infrastructure to support user signups without Facebook and can use that as leverage when renewing the deal.

As a musician I agree with your sentiment that artists should be compensated better, but I unfortunately don't see it having an impact on Spotify's success. If the major labels keep their catalogues on Spotify (because they own part of it) most users will find their favorite songs. Indie labels and artists can pull their records in protest, but casual music fans won't even notice. Just take a look at Spotify's Top 100 Tracks to get a sense of what most users are listening to.

Lastly, I won't count on Apple jumping into the streaming game any time soon. iTunes Match is less than a year old, and is clearly aimed at competing with on-demand services without cannibalizing the pay per download business iTunes built. Ping as you mentioned, was a failure. Based on the fact that Apple integrated Twitter so tightly into iOS (and soon OSX), I don't think they'll be focusing on their own social network in the near future.

Rhapsody and Rdio seem to be the best hope for a strong competitor to Spotify.

Lou

PS - Thanks for writing such a thought provoking article!

March 16 | Unregistered CommenterLou Paniccia

I disagree with your first point. I do agree with your distaste for the Facebook integration, but the fact of the matter is... it is overall an asset to them, and will continue to drive their popularity. It is becoming THE Facebook music player, and Facebook is THE social network, ubiquitous to almost everyone. Some people may be uncomfortable with this relationship, but those people, I suspect, are on the fringe.

On the second point, I agree that it is a problem, but isn't the hurdle you seem to think it will be. I maintain that most artists don't fully understand how to comprehend streaming revenue, anyway. People still want to compare plays with iTunes purchases, and neglect to look at Very Long Term perspectives. For instance, someone buys an iTunes track (or CD) and listens to that song for the next ten or twenty years, how many times do they play that track? How, then, do the payments compare (the one time purchase vs. a lifetime of streaming)? If they're even close, then Spotify isn't failing in the way people think.

But beyond that, as Spotify increases in popularity, it will become a liability to artists to NOT be on it. Even watching my own listening habits, artist not on Spotify are slowly ceasing to exist, a habit I don't like, but none-the-less has a bit of reality to it. And I am probably more conscientiousness of that than a lot of people.

March 16 | Unregistered CommenterDaniel

Thank you for such a wonderful read!
I can't help but wonder if Spotify is teetering on the edge of becoming mediocre at many things, rather becoming really great at one thing.
I understand that they're looking for industry-wide domination, but perhaps focusing even more on their newer markets before they go branching off into new directions so ambitiously would be wise?
Obviously they want to capitalise on current success and momentum and strike while the proverbial iron is hot- I just hope they maintain a balance between complacency and over ambition. I'd hate to see them lose it.

A true story: I spent a recent evening researching music streamers and narrowed my choice down to my two favorites: Mog and Spotify. Both have huge catalogs and good apps.

But Spotify demanded that I sign up through facebook and Mog gave me the option to sign up directly. I chose Mog and I love it.

Call me an anti-social music listener if you wish, but I do not want to app-spam my facebook friends if I forget to tweak my app settings. Spotify may not be losing everyone's vote, but it lost mine to Mog.

March 16 | Unregistered CommenterBen

I have been using since its US launch and I do have it linked to Facebook. It is an option. Also I believe that any music service that has a partnership with the largest social network in the world is a plus for that music service.

Also people are missing the point that Spotify is a streaming service and Itunes utilizes downloads...two different games here. People who continue to waste time complaining about the lack of revenue from Spotify's streaming will be left behind by the artists who are using their time to create new opportunities in this new world we are in. Go ask the guys who were hell bent on fighting .99 downloads.

Daniel: Thats an interesting thought. Streaming's ongoing long term revenue vs one time downloads

March 17 | Unregistered CommenterTaurean Casey

Guys thanks for the insight. Enough to write a follow up post to

Lou, you made a very strong point about them already having the infrastructure in place now.

Someone left a comment on HypeBot stating that it would be scary to see one company become the Os of Music and I agree with this totally

In my opinion the internet in general is the closest thing that we now have to an Os for Music

The financial returns from Spotify for an artist are close to negligible and most I know aren't even vaguely interested in it other than 'just another place to put my music for free'.

May 15 | Unregistered CommenterMuseIcian

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