Spotify vs The World
Since October 2008 Spotify has been shaking up the music industry with its offering of free music streaming. This was ideal for the user but after a reported loss of £16.66 million in 2009 it was clear that changes needed to be made to create a viable business.
If you are a regular free Spotify user you’ll already know that changes are afoot. Now a new subscriber can only listen to free music for 6 months and after this period they will be limited to 10 hours of free music per month and be able to hear their favourite tracks only 5 times. Spotify say that these restrictions will only effect ‘heavy’ free users and most people using Spotify for the right reasons (ie. to find new music which they then download for themselves) will not be effected by the changes.
These changes are yet another step towards pushing users to subscribe and now Spotify users will also be offered full syncing of all MP3 files including songs they have purchased elsewhere to be played via a range of devices including iPods. This move is the most direct body punch to the iTunes heavyweight champion of the music world that we’ve seen to date.
What makes Spotify different is the introduction of bulk package buys; you choose individual tracks in set packages from 10 tracks at £7.99 up to 100 tracks for £50, creating your own personalised albums. This could see some of the market share go toward Spotify although, as a monthly subscriber, buying songs seems bizarre when you have access to constant streaming 24/7 already so it will be interesting to see if this feature takes off and how it will impact on their user base.
Engine Creative has created and implemented Spotify campaigns and seen first hand the positive impact which they can have in generating brand awareness and traffic. The move away from relying so much on advertising generated revenue for Spotify will definitely make a difference for this media newbie:
Will the free user profiles still be right for targeted advertising?
Will brands shy away from Spotify advertising or will it have an increase in advertisements from the music industry in the same way which iTunes does?
Will audio advertising on Spotify cease to exist altogether?
The changes which Spotify have made and will continue to make will undoubtably be met head on by iTunes who won’t let go of their market share without a good, well orchestrated fight. We also mustn’t forget about Google who have just launched their Music Beta service in the US. It’s very early days but they are definitely after a piece of the action.
However the story ends, the evolving music services on offer should definitely be a positive thing for consumers and for brands and we’ll be there at ringside to keep up with the action.