Monday, July 06, 2009

Another internet music play gets a free ride from the City pages

All stories about music companies get disproportionate space on the financial pages because they provide the section editor with an excuse to run a picture of a glamorous woman singer under a headline about being "on song". There was a classic on the front page of the Sunday Times's Business Section yesterday: Fergie from the Black Eyed Peas under "Going For The Big Notes", which announced a story about Spotify seeking to raise another £30m. In this I wish them well but I wonder if a little bit of the page area devoted to Fergie's frock could have been used to ask the odd question.

Spotify costs the end user nothing. Its revenue comes from either advertising or monthly subscriptions. Since it's signed up more than 2m users since last October you might say that the company's proud claim to be doubling revenues monthly is not quite as spectacular as it first appears.


  1. Spotify will go big when they get mobile streaming right. Remember how everyone bought their music again on CD, well people will pay again for the stuff stuck on their hard drive at home as long as Spotify can offer something which to the end user seems like a limitless iPod. £10/month? Ok.

    The iPod wasn't the first mp3 player but they got it right. Spotify isn't the first streaming service, but they're getting it right.

  2. Chris Anderson's book 'Free: The Future of a Radical Price' (extract in the latest Wired) is interesting on this topic.

    At the moment I must admit I still find the amount and type of ads on Spotify easily tolerable, so I'm not tempted by the £10 per month offer, but if the ad-based service was taken away tomorrow I'd gladly sign up. It may be the 'drug dealer' model but £10 a month for such a vast choice of music is genuinely good value in anyone's terms

  3. I don't disagree. Douglas, but if they were persuading a lot of people to pay them £120 a year for access to music their revenues would be more than doubling every month.

  4. Funny how '£120 a year for access to music' sounds much more considerable than '£10 per month', isn't it?!

    Reminds me of a line in the great Mad Men, in which I think Roger Sterling says 'the greatest piece of advertising ever is '99p''.

  5. What's fascinating for those of us trying to make a living in this "space" or adjacent to it is your average Young Person's reaction to Spotify. Obviously (I mean, like, come ON), there's no question of paying for content under any circumstances whatsoever. And within a nano-second of usage beginning came the complaint that the damn thing somehow knows if you slam on the mute button when the ads kick in, pausing them till you turn the speakers back on. Like, WTF? That's a bloody liberty, that is....

  6. I click on a lot of banner ads in Spotify. Not because I want to, but they keep shifting their position whilst I'm scrolling.

    I'm sure they're getting some of the best clickthru rates in the industry with this shoddy practise.

    If I didn't love their service so much, I'd be asking questions about click fraud. Oh, I just did.

  7. gunnerboy9:24 am

    Just to confirm your theory, I can vouch for the fact that during my years working for The Sanctuary Group we were always certain of acres of coverage of even the most insignificant corportate event as journos were able to place the story below a shot of Kylie's bum or a gurning Robbie Williams (artists with whom we had the most tenuous of connections). Its a product of the fact that there are almost no publicly quoted music companies that the business papers can cover in any depth. Evevn in the FT, the articles were rarely anything more than a ransparent recitation of the company's press release...but I suspect Ms Minogue made that irrelevant.

  8. No no, the trick is to click on the ads - this generates click throughs which makes advertisers believe it's worth continuing to pay for ads, therefore keeping the service free. Of course, the moment that advertising window is open, you can just close it again.

    Also, isn't £10 a bit steep? If it was £3 a month I'd pay. Like Twitter. Twitter should charge a nominal £2 or £3 for a year's use to solve their problems. I think 90% of people would pay such a nominal amount. I would.

  9. Not sure how profitable they are but I willing pay my $12 to flickr for pro account mainly as the free accounts only allows you to see 200 of your recent pics. I also think people paying to join and upload stuff makes flickr a friendlier more positive place than say youtube.

  10. DAN W: But I don't want to click on the ads. I want Spotify to be a success because it's offering the everyone, the music fans, the advertisers and the music industry a fair deal.

    By tricking users into clicking ads Spotify is robbing Peter (the advertisers) to pay Paul (the music industry.)

    This isn't sustainable. Advertisers won't be that dumb for long.

  11. I think it's only a matter of time before they find the pricing model that hits the jackpot. I pay the 99p daypass quite frequently, but am also giving serious thought to doing the £99 per year offer and never buying another album.

    It's good for consumers - I've wasted money on so many albums in the past that I thought I'd love but didn't even like - and it's good for artists too: it's encouraged me to sample more new music than ever before.

    And in fairness to them, now is not quite the time to be hoping to quadruple your revenues from ad sales...

  12. J P Morgan teenage intern reported in the Guardian : "DOOMED.,YOU'RE ALL DOOMED!"