Since vinyl’s 80-year hegemony was challenged for the first time in the 1970s by the cassette tape, no music format’s dominance has endured for as long as the career of the average rock band.
CDs have come and almost gone, Minidiscs proved a false dawn and now downloadable MP3s, having rendered physical formats obsolete, are being challenged by another digital delivery channel: live streaming.
This latest assault on the status quo is led by Spotify, whose ambitious young Swedish owner wants to muscle in not just on the legal market, but also persuade those who download music illegally that their needs are best served by a legal site that generates revenue for the industry.
At a recent event for the Music Publishers Association, Daniel Ek, Spotify founder and CTO, proclaimed his desire to not only break iTunes’ monopoly, but also "create meaningful revenue for the music industry, and becoming the second company who's writing huge cheques to you guys."
So far, the service has had a fantastic reception from both music lovers and the press, and already boasts six million European users
It’s an ambitious goal. There are still 20 illegal downloads for every legal one, while revenues from the recorded music industry shrank 6% last year, the latest contraction in a long decline.
And the runaway leader in the legal download market, iTunes, has failed to make a dent in the numbers of people using legally dubious file-sharing sites, so why should Spotify be any different?
Well, Ek’s peer-to-peer streaming service doesn’t demand people pay for their music, and that’s the first essential difference between Spotify and iTunes. Eschewing the pay-per-download model, Spotify instead allows users to stream – meaning you play audio directly from the internet – tracks from a six-million strong catalogue as many times as they want for free.
The only catch is the display ads and 30-second audio adverts that play about every 20 minutes, although you can avoid the advertisements by subscribing, either 99p a day or £9.99 a month.
Fantastic reception
So far, the service has had a fantastic reception from both music lovers and the press. Founded in Stockholm in 2006 with TradeDoubler’s Martin Lorentzon and launched in beta only last October, this online jukebox already attracts six million European users, a third of whom are in the UK.
Now based primarily in Central London, Spotify has recently secured £30m of equity finance and is close to obtaining a further £30m to launch in the US later this year. Plans to roll out to China have also been announced.
Spotify is less revolutionary than one might suppose. It didn’t pioneer ad-funded free music provision; it was simply the first application of its type to execute the idea effectively.
Other, similar services have appeared and, in Spiralfrog’s case, folded. Despite peaking with six million monthly visitors and deals signed with most major music labels, the North American service collapsed after just two years.
Spotify, not yet active in the UK for 12 months, will hope to avoid the same fate. Ek can reassure himself with the knowledge that Spiralfrog users had to wait for downloads rather than enjoy instant streaming, and had access to three million fewer songs than Spotify users.
Intuitive
The source of Spotify's strength is its simplicity – it doesn’t try to do too much. Its interface has been stripped down to functions essential to navigating through the catalogue, filtering tracks, creating playlists, playing tracks and playing genre-and era-specific radio channels.
It’s a gimmick-free zone. None of Spotify’s rivals offer such a potent combination of large, free catalogue, easy to use system and rapid streaming.
Ek, who started his first business aged 14, feels Spotify is, as every innovative new business should, solving a problem.
“I feel that today there’s still an underlying problem in simply playing whatever content you want, when and as many times as you want it, and that’s the problem Spotify’s looking to solve,” he says. “I honestly believe that we don’t have a main competitor as no one’s delivering music to users in quite the way we are.”
The closest approximation is We7, the service launched in 2007 with investment from musician Peter Gabriel. The service, which runs through your web browser rather than a downloadable interface, is far from badly designed, but it’s a testament to Ek and his team that next to Spotify it looks cluttered and seems awkward to navigate. Worse still, every single track is prefaced by an ad, or features Peter Gabriel.
