Spotify & Online Music: My Survey Responses

Following on from the results of his online music survey, Leeds University music student Richard Pilkington asked me for my own opinions on Spotify, online music, and the future of music distribution. I spent some time putting my thoughts together and composed the following replies to his thirteen questions.

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Have you used Spotify before? And if so what is your opinion of it?

I use Spotify every day and think it’s the most important thing to happen to the music industry since the MP3. It’s simple and easy to use, plays songs instantly, lets you share music with ease and is 100% legal. At a stroke, Spotify obsoleted the need for illegal downloading as it’s faster, safer, and less hassle than fiddling about with dodgy badly-tagged and variable-quality downloads. Spotify changed my musical life and I am now a passionate advocate for the service.

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What other ways do you listen to music?

I’d say over 90% of my listening is on Spotify, but apart from that I do still buy the occasional CD when I particularly want to support an artist (I try to buy direct from the artist’s website). A few bands I like aren’t on Spotify yet, so I buy their music on CD or download. I also sometimes listen to music on BBC 6 Music, YouTube and soundcloud.com.

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In the IFPI digital report 2010, Daniel Ek (CEO of Spotify) stated that “Spotify’s primary objective is to migrate illegal file-sharers to its service, shifting 15-25 year old music fans to a legal model that puts money back into the creation of new music.” Do you think that Spotify has been successful in doing this? Has it migrated illegal file sharers from accessing music illegally?

Spotify has certainly migrated many illegal file downloaders into a legal environment: I’ve not downloaded a single album that way since I discovered Spotify, and I know many other people who are the same. As to how many music fans have been converted, well the figures you see are all wildly contradictory. The big labels have a vested interest in exaggerating the numbers of illegal downloads (and they still often equate one album download equals one lost album sale which is ridiculous), while sites like TorrentFreak do the same but for entirely different reasons.

Spotify has been gaining traction in the UK for a couple of years and every new user is potentially one less illegal downloader. But the “Napster generation” have been doing it for at least a decade now and that’s a hard habit to break. And 15-25 year olds have seen their parents illegally download music so they assume that it’s OK to do too. Couple that with the desire to placeshift your collection (to a work or school PC, mobile, car etc.) for which you need to pay for Spotify Premium and the job to migrate illegal downloaders is perhaps more difficult that it at first appears.

While some have questioned its validity, Envisional’s recent P2P study seemed to show that music pirating is way down the list of types of  illegal download: barely 3% compared with porn (35%), movies (34%) and TV shows (15%). So you could say that streaming services like Spotify are already playing their part.

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What do you think record labels should be doing in order to migrate illegal file sharers to source their music legitimately and legally?

Support and promote streaming services like Spotify; change mind-sets to think in terms of ARPUs (average revenue per user) instead of unit sales (CD or track download); educate customers (i.e. music fans) rather than threatening or scaring them; continue to lobby governments for copyright infringement laws such as the UK’s Digital Economy Act.

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In the IFPI 2011 report, one suggested method for moving forward in developing the digital download industry is for record companies to create partnerships with Internet service providers. Do you see this happening in the future and how do you think it would benefit the music industry?

I expect to see many new deals and partnerships between ISPs and record companies, but I am not convinced that this is a solution.

The Digital Economy Act (as it currently stands) puts additional costs onto the ISPs, as they are required to implement technology to monitor their users for copyright infringement as well as manage and administrate this data on behalf of the copyright owners. Consequently they may be wary of partnerships with the very companies who are the cause of this additional burden. On the other hand, closer ties might help to reduce their costs.

Several ISPs have already tried to launch their own music streaming/download services (e.g. Virgin Media and Universal), but these mostly seem to have failed. I suspect this is due to incomplete catalogues (unlike Spotify UK which has all the four big labels and indies on board), not having a fast, easy-to-use interface, and failing to convince customers that an ISP can be more than just a utility Internet pipe.

The recent deal between We7 and Hull-based ISP Karoo is the type of partnership I expect is much more likely to succeed; deals between ISPs and existing music streaming companies rather than between ISPs and individual record labels directly.

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How much do you think people should be paying for music?

Ten pounds a month for high-quality, all-you-can-eat, listen-to anywhere music sounds reasonable to me.

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In your opinion, how does Spotify compare to other music streaming websites on the internet, such as Grooveshark, Napster, Rhapsody, Last fm, etc?

It’s tricky for me to compare these: I live in the UK so do not have access to the likes of Rhapsody or MOG (and I believe this country-based lock out issue is another reason to tempt music fans into illegal downloads). I don’t consider Last.fm a competitor to Spotify as its service offering is quite different. I’ve not yet tried out the new Napster although it’s price-point does seem reasonable (despite still being stuck in the old “download an MP3” model). But I can compare Spotify with Grooveshark, We7 and perhaps Sony’s Qriocity.

Spotify knocks Grooveshark and We7 into a cocked hat: Its user interface is superior (making it faster and easier to use), its catalogue is richer and larger, its feature-set is better and it has the “wow” factor that the others don’t. Spotify’s underlying peer-to-peer technology gives it a killer edge over the competition, and the company itself is clearly leading the way in cloud-based ubiquitous streaming music.

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In your opinion, will Spotify be successful if it is launched in the United States?

The market is already maturing over there (Rhapsody, MOG, Pandora et al) in a way that it wasn’t in Europe before Spotify came along. Factor in whatever Apple and Google are up to and it’s going to be tough for them. But Spotify has heaps of unique features and user-love; it’s learnt a lot from growing the market in Europe and has many talented people to draw from. Spotify seems close to making a profit in the UK this year for the first time, but given the costs associated with setting up in the US I think it’ll take a few years before they reach profitability there too.

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What do you foresee as the future for music distribution? Is the future online music streaming services?

Absolutely streaming, yes. CD will remain for a while yet (it’s something to sell fans at concerts), but I think the age of the MP3 player is already over. Remember ringtone downloads? That’s the way I think music downloads are going too. I buy access to an infinite stream of music that I can play whenever and where-ever I like, and as often as I want. Track-by-track downloads just cannot compete with that.

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Something that has been reported about greatly, is that Spotify is a good means of tackling the illegal download market. However these reports also claim that Spotify does not support the artist as much as it should do. David McCandless reported in April 2010 that an artist must receive 4,053,110 plays a month on Spotify in order to be earning the minimum wage. What are your thoughts on this ?

That McCandless infographic was interesting but fundamentally flawed. For a start it assumed that every artist gets the same for a play on Spotify which is not the case. I also think it’s unreasonable to compare a unit sale (of say a CD) with a streaming service: that’s like saying a musician is getting a bad deal when you watch him in concert on TV, since you’re not buying it on DVD. A fairer comparison would be with plays on radio, but McCandless didn’t include that (Spotify pays artists a lot more compared to radio).

The best way to support an artist is to go see them in concert and buy some merchandise, or buy a CD from their website. And the best way to hear about these artists is through services like Spotify: it’s a tremendous marketing tool that also makes the artists and labels a bit of money too. It’s difficult to quantify, but Spotify clearly drives sales in other areas and that should not be underestimated.

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Do you think that the record labels are responsible for ripping off the artist? And if so should Spotify try to force labels to be fairer to the artist, as they believe in ‘putting money back into the creation of new music.’

Every piece of music has many people behind it: not only the artist but also session musicians, recording engineers, producers, mixers, managers, advertising people, marketing, graphic designers, web and social media guys, A&R folk, sales staff, back-office staff… all these professionals need to make a living and get paid and they and their families depend on the artist for that. So no, I don’t think the labels “rip off” their artists. Record labels are commercial entities whose main goal is to generate profit for their shareholders. Their product happens to be music which Spotify licenses from them. Spotify’s main goal is also to generate profit for its shareholders: that’s business. Any business that depends on art faces the same accusation. If artists feel that they’re being ripped off they can leave the label and sell their music direct to the fans – it works for many bands, but then they lose all the support and promotion the labels provide.

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Sweden and France have had new enforcement legislations introduced in the past couple of years. Sweden saw a successful year in 2009, with the increase of digital sales and the decrease of copyright infringers. Do you think that governments in the rest of Europe should enforce harsher laws against copyright infringers?

Yes, I think it’s been shown to help migrate illegal downloaders to legal services, but those legal alternatives need to be available for them to do that. I’ve already mentioned the Digital Economy Act here in the UK; despite its many obvious flaws I think the intention is a good one, although I do worry that relatively innocent music fans may end up with a criminal record as a result. There are also some serious privacy issues at stake. But provided there are multiple warnings sent to infringers and clear evidence to back up the case, then this sort of law seems necessary if we want to keep music alive.

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Finally, in my survey that I conducted, I discovered that 91.5% of survey participants said that Youtube was one of the ways in which they accessed music. Do you think that the record labels’ Youtube channels have been successful in migrating people from watching illegal Youtube posts to the legitimate ones on their Youtube channel?

To a reasonable degree, yes. YouTube’s audio analysis software seems to be very efficient at spotting illegal posts of songs, and now that the likes of Warner and the PRS have settled their differences with Google, artists can be reasonably confident that they’re getting a share from their songs being played on YouTube. I personally don’t like all the VEVO branding plastered all over the video pages, but then when it comes to music I prefer to pay for an ad-free environment.

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Thanks again to Richard for allowing us to post the details of his survey,  and I wish him the best of luck with his paper! 

  © 2016 Jer White / Pansentient League.
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