Thursday, 26 January 2012

Spotify: Redefining Music Monetization

I’m a Spotify Premium customer, meaning I pay £9.99/month for unlimited access to virtually all music that is out there – including streaming onto my iPhone. I do not own any music, don’t use the iPod function or even have iTunes. Spotify meets my music needs better than any other provider.

In the pre-Spotify era I would not have dreamed of spending £120/year on CDs or downloads, but now feel it’s providing me with such good value I don’t think twice about it. It is their ability to innovatively monetize the market that seemed like it was fast heading into the abyss of promotions (HMV) and giveaways (YouTube) that I admire most.

It’s true that Spotify’s profitability and financial future is a very controversial issue. Yet no matter how healthy their finances are, it is critical to appreciate the revolutionary nature of their new revenue model. At a time when piracy threatens the music industry an approach that gets customers to pay more for accessing music whilst feeling they are getting better value is not to be sniffed at. The consumer interface of this model is a brilliant innovation, and even if Spotify are unsuccessful at making its financial ends meet other music providers should take note.

Spotify have not yet got it right. But they’re onto something, and the music industry better take notice of this completely new way of engaging with their audiences. After all – iTunes caught the big players unaware, and many (HMV included) have still not developed a strong enough platform to compete with Apple. History might be about to repeat itself.