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Everything about Spotify- Midterm

March 10, 2019

 

  

     Spotify had a humble beginning and is now worth billions. It was founded by Daniel Ek and Martin Lorentzon in Stockholm, Sweden as a small-startup in 2006. They came up with the idea to address the problem of piracy the music industry was combating. “The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry," is what Ek told The Telegraph. It was launched in 2008 as a free service with advertisements. When it launched it got some bad light after Taylor Swift called Spotify an “experiment.” After three years she put her indifferences aside and had all her music uploaded to Spotify. Jay Z agreed with Taylor and for those reasons started Tidal. Recently, Spotify has been focusing on live events and exclusive shows. The company even hired a team to specifically work on live events for hip hop since its now the most popular genre. Spotify has invested millions in growing into podcasts and is trying to be the “Netflix of audio” said Zack Fuller Midia Research music analyst. Expanding into the podcast market was with the intentions of earning more from advertisers/ sponsorships as well as putting Spotify above Apple Music and Tidal. Currently, “Spotify is a music, podcast, and video streaming service… Spotify broke into the music industry spearheading an initiative called ‘freemium’ where a consumer could listen to the music on the platform tagged with advertisements(Cirino).” Spotify is available in more than 78 countries including the America’s, a lot of Europe, and Australia. Spotify ‘s collection is at about 40 million-plus songs, and it adds over 20,000 new songs every day.

 

     Unique features offered by Spotify that I find most appealing is the ability to listen on any device (phone, tv, car, tablet, game consoles), download music to listen to off-line, view lyrics, fan first emails, and artists have profiles with their music, links, merch, and concert dates. Overall, I use it because it is super easy to use and navigate. The best features that set it apart I feel are its all its exclusives (interviews, concerts, live events, tracks), a collaborative playlist feature that allows you to work together with other people to edit playlists, and its amazing algorithms for playlist and artist suggestions.  Spotify has three automatic custom playlists Daily Mixes and Discover Weekly to show you songs based on your listening habits. Other features include shuffle play, Spotify Radio (create radio stations off an artist, song, or playlist), “behind the lyrics” to look into their process and ideas behind the song, Podcasts, music videos, play queue and history, mute artists, follow friends and see what they are listening to, crossfade tracks for a smooth transition between two songs, and you can choose music quality you stream or download at. Spotify has some amazing feature and new technology that is attracting millions of people.

 

        More than 200 million people actively use Spotify monthly and more than 91 million of those subscribers are paying as of 2018 third quarter. “It accounts for 30% of the total revenue generated by the recorded music industry, and 42% of the streaming market(Iqbal).” 44% of subscribers listen every day and spend 25 hours of listening to a month, Spotify has little over a third of global streaming usage. Users spend about a third of their time on Spotify-generated playlists and another third of their time on user-generated playlists. Subscribers that choose to pay for a plan get premium which allows members to listen without wifi, download content, and listen without advertisement interruptions. Regular premium costs $9.99 a month but there is a student plan for $4.99 a month with Hulu and SHOWTIME, users just need to have a college email. There is even a plan for multiple accounts, a family plan is $14.99 a month and is for up to 5 family members. They also have a partnership with Starbucks. Has far as costs go for artists “Spotify pays royalties based on the number of artists' streams as a proportion of total songs streamed on the service. They distribute approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements(Cirino.)” “Spotify pays about $0.006 to $0.0084 per stream to the holder of music rights. And the ‘holder’ can be split among the record label, producers, artists, and songwriters (Sehgal).”

 

         One of Spotify’s biggest competitors is Apple Music, no doubt. They are streaming service offered by Apple and is pushing iTunes aside. We are now in the digital music age where is better to stream and have access than to buy and own. Apple’s iTunes allowed listeners to only listen to songs they bought, so they had pay per song. The new Apple Music is a monthly subscription for unlimited streaming.  They also have 24/7 worldwide internet radio stations. It does have a month-long free trial but after it expires users have to pay. The prices are the exact same as Spotify ($9.99 a month, $4.99 for students, $14.99 for a family plan) except Apple Music’s family plan has 6 members and Spotify’s is only 5. Apple Music has over 56 million subscribers in 115 countries and a collection of over 40 million songs. Apple states that they pay out 70% of streaming royalties back to the Rights Owners. Amazing features that set it apart is the deals they with special artists like Drake and Frank Ocean to release their music first.

 

        Soundcloud is another music streaming service that is in competition with Spotify as well as Apple Music. “The company expanded from being a platform solely for new and unsigned musicians and DJs to share their work(3).” It is the most diverse creator with 76 million users and 135 million tracks. Great service that allows people to create/ upload as well as stream, discover, and enjoy. Users also have the ability to share music and connect directly with artists and have access to raw demos, covers, remixes, podcasts and more. IMB music monetizing is available for Pro users ($12 a month) with a fast payout in a month. Independent creators retain all rights for their original music and choose to monetize with SoundCloud Premier. It is also free to make that music available across other platforms. In short, Soundcloud is trying to help self-made artists by having tools for promoting, monetizing, analytics, and uploading on other platforms.

 

       Ben Phipps is an artist that owes his fame to Spotify. He is 26 years old and never went to college.  He only had two years of musical experience before putting out his biggest track, “I don’t think so.” At the time of the article, the song had 18 million streams, now at 22.6 million streams. At first, the song was rejected by labels and managers due to the fact he was not that big of the artist, did not stand out, and didn’t have enough experience. Then Phipps song was added to a Spotify playlist and it took off. This story is a great example of how playlist placement is super important and can really push start someone’s music career.  “Spotify metrics said that people were really liking it and adding it to their personal playlists. So this boosted the track in Spotify’s algorithm and once it was added to some major Spotify playlists, it started getting around 100k plays a day, even 5 months after (8).” Ben is currently now using AWAL/ Kobalt for label services and has been approached by major labels. He stated he does not wish to sign to major at this time because he is enjoying where is at right now.

 

   An artist that has already been famous but used Spotify to help boost their status is Drake. Everyone and their mom knows who Drake is. I feel like I don’t need to explain that he is an award-winning millionaire rapper and is currently one of the top artists worldwide.  Drake is at “ over 8.2 billion streams this year [2018], Drake takes the crown as the world's most streamed artist (Holbrook).” His music gets up to 10 million streams an hour, and his LP 'Scorpion' is hands down the most streamed album of the year on Spotify. Drake has generated over $100m on Apple Music and Spotify alone. This also doubles as an unsuccessful story for a contemporary artist, as well- Back in July when Drake dropped his album ‘Scorpian’ many subscribers complained to Spotify that they were overly advertising Drake. He was on playlist covers on playlists were his songs wasn’t listed/included. He was then the face of a handful of playlists that weren't even in his genre like KPop, grunge bands, EDM etc. I actually emailed Spotify’s customer support because his face was on the ‘Mint’ playlist, which is an all EDM/ techno top charts- none of Drake’s song where even on the list. Drake's ‘Scorpion’ take over on Spotify went viral on twitter over users complaining. His face was all over widgets, popups, banners, and cover art all over Spotify. They technically didn’t count as ads because it wasn’t between songs and it was all over both free and premium members feed’s. This was compared to when Apple uploaded U2’s album to everyone libraries without consent. So, many subscribers were complaining that this was a form of advertisement and members pay not to have ads. Personally, to me, this was more of a promotional takeover and I think his promotional team accomplished their goal. This strategy/ tactic helped break the one-week U.S. streaming record in only three days.

   I could not find a story on an unsuccessful artist on Spotify so I wanted to look into the companies downfalls. What I particularly wanted to look into was the fact that a decade after first launching Spotify still struggles to turn a profit. In 2017 the company reported having a net loss at almost $1.5 billion. There are many hidden costs of running a music streaming service. The biggest lawsuit against Spotify was for $1.6 billion. The company was being sued by Wixen Publishing (Tom Petty, The Doors, Rage Against the Machine). “Spotify is being sued by Wixen because of mechanical licenses — a legal regime that was created in reaction to the dire threat to the music industry posed by player pianos. Yes, the automated pianos with the rolls of paper with punch holes in them. But that’s not actually the weird part. The weird part is that Spotify is fundamentally being sued for literal paperwork: Wixen says Spotify is legally required to notify songwriters in writing that they’re in the Spotify catalog (Jeong).” Sending out a paper notice totally made sense back in the day when music was still physically purchased at stores but in a digital age, it is unreasonable. Wixen verses Spotify is less about artists being compensated the correct amount and more about rules/laws being very outdated and in need of revising. Later in 2018 the feud was settled but did not result in a huge billion dollar payout. Wixen President Randall Wixen then released this statement: “I want to thank Daniel Ek and Horacio Gutierrez, and the whole Spotify team, for working with the Wixen team, our attorneys and our clients to understand our issues, and for collaborating with us on a win-win resolution.”

 

    When conveying a survey a survey of college students on their DSP use I asked about whom they used before, what they like/dislike, and if they pay for a plan. Out of the eight people I interviewed five of them only use Spotify exclusively, two use both Apple Music and Spotify. Only one person used Apple Music exclusively.  Prior to discovering the service they have now six people used iTunes to listen to music, the other two answered with Pandora and Youtube. Seven people pay to use their selected services and only one person used Spotify free. The two people that use apple music both pay for it however one pays regular prices and the other utilizes their student discount. Only one person is on a family plan and it is for Spotify, whereas the four other Spotify users all pay for the student plan. So out of the seven people that pay five are on student plans (four Spotify, one Apple Music). The only exclusive Apple Music listener did not have any complaints about the platform and said he liked “the availability to pretty much any song and their radio I can listen to and find new music.” Two users of Spotify did not like how often the app glitches and crashes. Other factors users I interviewed didn’t like about Spotify was some music isn’t available, uses a lot of data, a lot of limitations with the free version, and how they took off the preview feature. What these users love about Spotify definitely outweighs the bad, which is why they stay and what continues to attract new listeners. Jessie said she “loves their exclusive singles that are only on Spotify and I love creating my own personalized playlists.” Four people mentioned that they use the app because of their suggestions with Weekly Discovery and Daily Mixes 1-3. The algorithms Spotify has truly allowed and has aided many of my friends to discover new artists, myself included. My girl Julie said “I like how Spotify is set up and its suggested playlists that it makes for its users. I always like the music they suggest and I feel like they do a very good job of giving me new music that I know I'll like.” At the end I asked if the were considering another streaming provider, five said no. One person who uses both Apple Music and Spotify is planning to fully commit to Spotify and plans to pay for their student plan. One Spotify user is thinking about trying Apple Music but will not leave Spotify completely. An lastly one of my peers is looking into Bandcamp mainly because her music taste is more underground alternative bands.

 

   Spotify is a multi-billion dollar music streaming company. They definitely lead the game in switching over from purchasing and owning a song to streaming and having access. With 191 million active monthly subscribers it's the public’s choice DSP. “Spotify went public in April 2018, with a valuation of $26.5 billion by the end of the first day’s trading. Spotify valuation in late November 2018 was $25 billion. Highest valuation to date is $35 billion in July 2018 (Iqbal).”







 

  1. Cirino, Stephen. “Streaming.” Digital Distribution. Lecture.  21 Feb. 2019.

  2. Holbrook, Cameron. “Drake Is the Most Streamed Artist on ​Spotify in 2018.” Mixmag, Mixmag, 5 Dec. 2018,

  3. “How Spotify Came to Be Worth Billions.” BBC News, BBC, 1 Mar. 2018,

  4. Iqbal, Mansoor. “Spotify Usage and Revenue Statistics (2018).” Business of Apps, Business of Apps, 21 Dec. 2018,

  5. Jeong, Sarah. “A $1.6 Billion Spotify Lawsuit Is Based on a Law Made for Player Pianos.” The Verge, The Verge, 14 Mar. 2018,

  6. Sehgal, Kabir. “Spotify and Apple Music Should Become Record Labels so Musicians Can Make a Fair Living.” CNBC, CNBC, 26 Jan. 2018,

  7. “Spotify Technology on the Forbes Top 100 Digital Companies List.” Forbes,

  8. “Success Stories: How Ben Phipps Reached over 18 Million Spotify Plays.” Heroic Academy, w30 Oct. 2017,






 

Peer Research:

What music streaming service(s) do you use primarily?

  1. Apple music and Spotify

  2. Spotify

  3. Usually Spotify or sometimes Apple Music

  4. Spotify

  5. Spotify

  6. Apple Music

  7. Spotify

  8. Spotify

How much are you paying to stream?

  1. $4.99 for Spotify, Dad pays for apple music

  2. $0 for Spotify

  3. $9.99 for apple music and $0 for Spotify- use to have premium but I don't anymore

  4. $4.99 for Spotify

  5. $4.99 for Spotify

  6. $4.99 for Apple Music

  7. $14.99 for Spotify

  8. $4.99 for Spotify

Are you apart of any bundle plan with your music service?

  1. Starbucks and student

  2. None

  3. None but will use Spotify student when I switch

  4. Student

  5. Student

  6. Student

  7. Family

  8. Student

What feature do you like and why?

  1. Open availability to music, song suggestions weekly

  2. Ability to create as many playlists as possible

  3. I like how Spotify is set up and its suggested playlists that it makes for its users. I always like the music they suggest and I feel like they do a very good job of giving me new music that I know I'll like

  4. No need to buy music individually, tons of artists and genres, also has podcasts, easy to use, easy to share a playlist

  5. Able to download music to listen offline

  6. I like the availability to pretty much any song and their radio I can listen to and find new music

  7. Love their exclusive singles that are only on Spotify and I love creating my own personalized playlists

  8. Their suggestions through daily mix playlists and discover weekly are perfect and so customized- great algorithms  

What feature do you not like and why?

  1. Using data if songs not downloaded

  2. Don’t really have anything against Spotify at the moment.

  3. I don't like that you can't pick a specific song on Spotify if you don't have premium, but I understand that there are certain things they need to make special in the membership to make people want it so they can earn a profit

  4. Some music isn’t on Spotify,   some music is only on SoundCloud or apple music

  5. How often it glitches and won’t play

  6. Do not have any complaints

  7. I hate how they took off the preview feature- to preview a snip of the song as they have on iTunes

  8. Glitches sometimes and won't play

What streaming service did you use before?

  1. iTunes with iTunes gift card

  2. Youtube

  3. Back and forth between Spotify and Apple Music

  4. Pandora and iTunes

  5. iTunes

  6. Pandora

  7. iTunes

  8. iTunes

Are you considering switching services- if yes to who and why?

  1. No

  2. Bandcamp, I’m beginning to get into really minor bands who don’t have their music on Spotify yet but continue with Spotify

  3. Plan on totally committing to Spotify because of the student plan and all my music is on Spotify

  4. Apple Music, for some special artists- but most likely will not switch  

  5. Considering Apple Music

  6. No

  7. No

  8. No

Students I asked

  1. Bri B. (graphic design)

  2. Frances Z. (MBET)

  3. Julie S. (film)

  4. Eleanor Linz (MT)

  5. Chelsea L. (MT)

  6. Evan P. (acting)

  7. Jessica K. (photography)

  8. Myself  (MBET)










 

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