Hypebot has had a lot to say about the service since it's inception, and this week has been no different. Of particular interest to me was this article that says that Spotify has hit 3,000,000 paying subscribers. The article estimates that Spotify has 12,500,000 users worldwide and a conversion rate of 20% is nothing to sneeze at. Spotify also accounts for 42% of all Swedish record label income (Spotify is based out of Sweden), which is kinda cool and shows that they might be onto something.
However, not everyone is happy with the new streaming service. For instance, indie artists have reason to be mad, as for all this growth they only see $.001 more per streaming. Furthermore, Spotify reportedly has been asking for more money. Despite all this success and paying indie artists next to nothing Spotify is still in financial trouble. While there is no way to verify this, due to Spotify's (somewhat worrisome) lack of transparency, I can speculate as to why this is: the majors
You see, the majors have all invested in Spotify (have shares and what not) and negotiated there way into premium royalty rates. Without their support (read:i catalogs), Spotify would never have been able to take off the way it did. And it would appear that they are bleeding the service dry before it ever reaches its full potential.
Which is sad, both because of the potential Spotify has, and because this is another in a long line of mismanagement of new technologies by the record industry. Record labels really need to hurry the hell up and come to terms with the fact that times have changed, and that they are most likely never going to be the giants that they once were. Especially if they keep pulling stunts like this. The consumers value of music as a product has changed, and their business models need to change accordingly.
However, even if it fails, Spotify still demonstrates some very important facts about modern music consumers. Their most basic subscription plan offers people unlimited music without ads, the ability to import their music collection and the ability to share it with friends. The last perk is the one worth noticing, since the first two are easily achievable through piracy (and don't tell me storage space is an issue, a TB drive is about $100 and will hold more music then most people will ever listen to). Music still plays a large social function (which is why live shows haven't gone away, and won't until we are all living in the Matrix), and many (myself included) form at least a bit of their identity around it. Being able to show your friends that you are as indie/underground/metal/punk/hip(ster)/pop/alternative/etc. as you appear to be has (an admittedly narcissistic) value to it. A value of $4.99/month to be exact
Additionally, the premium service offers high quality audio, offline accessibility, the ability to "take it abroad" (not sure how this differs from offline, but whatever) and will let you take it on your mobile. Again, the last one is the only thing that differs greatly from the benefits afforded by piracy. Not because it is hard to transfer pirated media to a mobile device, but because with Spotify you don't need to keep changing out said media manually. It appears that having instant access to any song ever made on the computer isn't enough anymore, we need it on our smart phones too (because musical ADD is a horrible, horrible affliction). And even though this shows that society's collective attention span is maybe a minute tops, it doesn't matter. Because people will pay for it, despite having the option to get music for free, and that's really what counts.
If Spotify does go under, the next service (for there will be another, Spotify is a game changer) will be wise to keep these benefits in mind. They should also try and avoid the mistakes Spotify has made by giving indie artists equal (or substantially better) treatment and negotiate harder with major record labels to pay reasonable (read: sustainable) rates. Although if Spotify does go down, I imagine the next service will have an easier time pulling this off. Because once it goes away, the majors will start to miss that revenue and realize what a good thing they had going. And how they managed to completely fuck it up. Again.
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