Monday, 6 April 2009

Spotify - can it survive and prosper

A while back I gave  talk at the Financial Times conference on digital media.  One company I suggested that we all watch is spotify an online free juke box supported by subscription or advertising.  I suggested that it could 'take on free' and win. I still think so but I need to qualify a bit more.
If you want some music, any music then you will find it for free.  When no one is looking you can run audio hijack and copy tunes streaming from YouTube and add them to your mp3 player - all for nothing.  
We have a massive music listening population that essentially values the raw content of music at precisely zero. On the other side of the equation - in the UK at least - you have the PRS, the Performing Rights Society.  This is a kind of trade union for musicians and campaigns often quite aggressively on behalf of musicians and their royalties.
The PRS is the organization that is suing those oil changing garages for playing their radios within earshot of the customers or even worse by  people walking by.  The PRS  are currently the bullies of the entertainment world and they are its worse problem right now.  The problem with the PRS is that they value recorded music in the overinflated way we used to accept in the 1970's and 1980's.  
A common complaint is that the average musician earns just £10,000 per year.  
Well I could bring that average down myself by becoming a professional saxophone player, but I would be one of many rather crap sax players in an oversupplied market of OKish musicians. Perhaps the average salary for a musician is £10k for a reason.
Companies like Spotify must solve the mismatch of the PRS's high sense of musicians importance and the listeners correspondingly low estimation.  They must do so by adding enough value to their output such  that listeners will pay for it either directly or by listening to advertising.  That value must be enough to pay the PRS for the content and to make a profit.  
The users won't budge unless they see a real value in doing so.  The PRS have the opportunity to destroy another bridge between the two false worlds of zero value content of listeners and super value content of musicians.  If the PRS kills off Spotify by asking too much, then listeners will only sense the loss when there is little new music being produced.

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