Spotify and The US Digital Music Landscape
September 12, 2011 § 3 Comments
September 12, 2011. Over the last decade, like many things, the music landscape has changed dramatically. However, I think we are finally at a point of emerging stasis. There are several digital distribution ecosystems that seem stable (i.e. iTunes, Spotify, Pandora, etc), digital music adoption is incredibly high (by 2012, according to Yankee Group/Internet Retailer, more music will be sold digitally than in stores) and the supporting technologies are everywhere (i.e. any device that can play or stream music. which is just about everything these days).
In thinking about my experience over the last decade…here is what I recall, where I think we will end up, and my thoughts on the disruption I expect Spotify to cause:
Circa 2000: The Napster Era – My first exposure to finding and sharing music in a digital format. Paired with a CD burner, it was a fun time (only to be cut short by the music labels).
Circa 2002: Enter the iPod – MP3 players go mainstream and I get one for Christmas. I spend months digitizing my music collection and buying tracks or albums from the iTunes store. Very irritated when my computer crashes and I have to start over.
Circa 2003-2006: Music Acquisition Days – I have tons on digital music now and have multiple ways of acquiring new collections. At points I am on a mission to just grow my database – friends, online sources, etc. I am also using external hard drives to back it all up.
Circa 2007: Music Management – Now that I have so much music, just playing my collection on random is not that fun. Too much variety and some junk. Now its time to curate the collection and create playlists.
Circa 2008: Music Discovery – I begin working with a music start-up that is trying to create a business around playlists. As part of this, I get a ton of exposure to the world of music blogs, online radio, torrents, and everything in between. This sets me off on a great music discovery mission and I am giddy over the options (iMeem, Lala, Pandora, Last.fm, Indieball.com, Daytrotter.com, IndieRockCafe, etc – and that is not even scratching the surface). There are lots of places to go and finding needles in the haystack are fun.
Circa: 2009: Here Today, Gone Tomorrow – During a short period of time, it seemed all of the big players raced to establish the number 1 music distribution service across several business models: Pandora (ad supported radio), iTunes (music store), Rhapsody (subscribe to database of music), and MySpace (social network and store). Each of the leaders gobbled up companies like iMeem and LaLa to add to their feature bench and most companies faded due to poor performance, undifferentiated offerings, royalty issues with the labels, or in many cases – no sustainable business model (really…people are still learning this one).
Circa 2010: Cloud Music Emerges (almost) – 2010 saw two new entrants, Amazon and Google, launch long awaited cloud offerings. In addition to buying music you could store all of your music and stream back to yourself. They provided an interface that merged music on the local device with music stored in the cloud and basically an overlay on top of iTunes. It felt kind of bolted on and not all that practical, but at least it gave me a cloud-based benchmark.
2011: Spotify Hits the US – After a long awaited period, Spotify finally becomes available in the US. Admittedly, the user interface needs a ton of work, it’s not as social as expected, and users need to go to complimentary sites like ShareMyPlaylists.com for an iTunes genius type feature. Despite all of that, Spotify is the real game changer. It solves almost all of the problems experienced in each of the predecessor periods.
Since this is may be a bold statement, let discuss Spotify’s impact (and how I think it is totally disruptive):
– iTunes: Spotify has 18 million tracks and I rarely find something missing except for older albums or indie albums still on the newer release side. Anything that is really missing I have anyway, or can get, and then Spotify will pick it up. SO…goodbye iTunes…you are fired as my primary music player.
– Pandora/Last.fm: It has been a great run, but I now have an ad-free radio inside of Spotify. I won’t give up on you either, especially when I just want to hear some new strings of music, but you are now second fiddle. I think you should strongly consider asking if Spotify will buy you.
– Amazon/Google: Your efforts were shoddy, but now you really have no purpose. You just got the wind taken out of your sales.
– Bit Torrents (and its ecosystem): As the modern day Napster, you just became somewhat unimportant. With the risk of copyright infringement penalties high and low-cost (or free) access to music, there is not much need to share via peer-to-peer file services. You will thrive for a while until a similar video services makes you truly outdated at least for music.
– Music Stores: This is the final nail in the coffin. You will still play a role for the next decade, but more symbolic than anything else.
Despite negative disruption for the above, there are other parts of the modern music system that have opportunity to benefit. Here are some predictions for those areas as well as some outcomes I hope to see:
– MySpace: MySpace is one of the few areas to hear artists voice from their perspective. It is easier than going to artist’s Web sites, it feels active due to its social networking origins, and its a great place to see and learn more about them.
– Aspiration: My hope is that MySpace is purchased by Spotify or creates a strong partnership. Imagine artists creating playlists that are immediately accessible and how easy it would be for individual users to post their playlists to Spotify and vice versa.
– Music Blogs: Music blogs are the heart and sole of new music. Blogs like Large Hearted Boy, Aurgasm, IndieBall.com,and Indie Rock Cafe will continue to be a source of music inspiration, commentary, spreading new artists, and helping to define the edges of music.
– Aspiration: My hope is that bloggers continue to do what they do, but Spotify links commentary/posts into artist bio pages or buys content as part of album or track reviews. Spotify should be carefully listening to the collective music blogs to determine what tracks, artists, and labels need to be added to the service and consider posting their own Spotify playlists. However, for this to work, Spotify will need to be really open and quick with getting new tracks into the service.
– Music Magazines: Similar to blogs, magazines are the commercial heart and soul of the industry. The likes of Rolling Stone, Pitchfork, and Spin create the polished content everyone loves, but does not love to pay for anymore.
Aspiration: Again, similar to the bloggers, syndicate your content into Spotify. Become part of the bigger value proposition and get key pieces of your content in front of people while they are listening to music.
After spending a couple of weeks with Spotify and just doing the upgrade these are my thoughts. As usual, any and all comments welcome.