Let's Talk About Spotify

Hey, I’ll keep the introduction short this week. I turned 26 on Monday. I'd like to thank Northeastern for letting me speak last weekend. I’m very behind on personal and professional emails. Thus I tried not to ramble too much in this week's newsletter. Same shit still applies if you want to reach me just send an email to pennyfractions@gmail.com, otherwise let's chat Spotify.

I’ll be honest I’ve avoided writing directly about Spotify the last few weeks in light of all the news around them going public mostly because I found it boring. Despite all of the new information they’ve released this month little of it felt truly new. Close industry observers already understood the iffy economics of music streaming and precarious position Spotify is in with regards to the major labels and royalty payment.

None of the new information changed my initial gut reaction that Spotify will be fine it’s first couple of years, but will start to see increase pressure from Amazon, Apple, and Google the more time progresses. Now that isn’t really too exciting. That’s why this week I wanted to talk about cars.

During Spotify’s investor day presentation, the Wall Street Journal did a live blog an I wanted to quote this particular section by Austen Hufford: "The company wants its services to be available on as many devices--from smart speakers to cars--as possible and to reach as many users as it can. Spotify said the best way to do this is by having an option that’s as cheap as possible, or free in this case. The company did say it was investing “quite a lot” in its free product."

There was nothing particularly new about hearing Spotify talk about it’s freemium business model or the fact it wants to reach into as many markets as possible. Except over the follow week, it started to click to me how this really is what differentiates Spotify from its direct music streaming competition. Apple Music assumes one is vested into the Apple’s ecosystem, Amazon Prime Music holds the same set of assumptions; Spotify instead leans on ubiquity and an thought people desire a seamless audio experience from phone, car, video game console, speaker (screenless advertising box), etc. That more than anything else they presented sounds like a smart bet.

The reason is that if it’s to be believed that Apple Music is climbing on Spotify’s paid users in the United States and Amazon’s own streaming service is gaining traction there needs to be something to fight these attacks on these two fronts. My reservation about Spotify in the long term is that in markets where it isn’t built into the phone, smarket speaker, etc, it’ll face a tension between devices that’ll offer their own music services. That’s why I always find it strange to see so much attention placed on playlists, because the music industry for a century has been pretty good at convincing people to re-buy their entire musical catalog on new devices, so I don’t think playlists alone can create a lock-in factor for people. So back to voice.

Earlier this month a few stories ran about Spotify testing out voice controls in their app. Casey Newton from the Verge pointed out these update could a response to Apple limiting the company from implementing voice commands in the Spotify app with Siri. The initial reports were slightly mixed, but for a product that is still in early testing it shows that Spotify is headed in the right direction with thinking about voice.

TechCrunch speculated further how this could be used for smart speakers, but I remain a bit skeptical of Spotify ability to break into that particular market right now. The idea sounds good on paper, but it goes against what appears to be the company’s goal of being the default audio software of the world. A speaker could open new doors, but at least right now I’d fail to see how it could surpass what Amazon, Apple, and Google are trying to do in that space.

(Side note: I often find something so odd about chatter around music streaming recommendations especially within the context of smart speakers. There is strange uncanny valley effect where not only are people rightly justified when a speaker doesn’t hear them properly, but a frustration builds cause the speaker doesn’t perfectly adjust to their taste. The “I was listening to Aphex Twin don’t recommend me Calvin Harris” problem. Perhaps I’m too picky about music listening and try to be rather exact, but I’m not sure I expect of even want a smart speaker to perfectly approximate my taste. Recommendation are recommendations not edicts.)

Variety earlier this month announced that Spotify was launching inside of Cadillac cars with plans of further expansion: "A rep for General Motors said the company plans to expand the service into Chevrolet, Buick and other GM cars in the coming months. The service is already available in certain Tesla and Volva models, as well as via Apple Carplay and Android Auto.An undercurrent in the narrative around Spotify going public is that the company is increasingly wanting to capture the market of FM radio."

That iHeartMedia, the largest American radio broadcaster, just filed for bankruptcy certain says there is a marketplace rife for change. While, I continue to read these stories about voice controls and deeper car integration my thoughts morphed into: “This is Spotify’s end game.” Not that Spotify is radio in your car, but that it’s radio everywhere. The music one hears from their smart speaker when they wake up, is the same music they play on their phone, that plays in their car, that plays at their work computer, etc. A fully integrated loop of Spotify content.

An oft quoted line from Daniel Ek, Spotify CEO’s New Yorker profile, is “We’re not in the music space—we’re in the moment space.” The last bit of Spotify news that better fits into the “moments” box was back in January when people discovered a new Spotify app called Stations. The idea was a simple truncated version of Spotify, where you couldn’t select a song, but simply were offered a few playlists (“stations”) to choose between. Initially thinking of this app on the phone felt strangely limiting, but in a voice controlled car set-up isn’t this exactly what a user might want. The potential integration in these spaces is how Spotify can come together. Spotify creates an audio ecosystem that one is fully immersed within. True 24 / 7 content. Obviously a number of fairly large companies will eb fighting hard to break this potential ecosystem Spotify would desire, but isn’t it comforting to think a single company could control all of the audio recording one consumes : )

Responses 2 Last Week

I got a number of emails that mentioning that King Princess is signed to Mark Ronson’s new Columbia imprint Zelig Recordings. My bad! I guess my quip about someone at Columbia doing a really hard playlist push for her song appears to be pretty much correct. Though this does slightly raise a question for me as a person that writes about music. For a marketing point of view where does the music press enter into the equation? Does it happen further down the hype cycle and instead of debuting a track with a website that early kind of press is held until the artist is already fully formed and ready to enter the bigger spotlight? I know plenty of PR people read this so would love to know if I’m off the mark here. The shift towards playlists and how it effective building an artist’s narrative is one I’ve thought about a little, but would love deeper insights.

Links 2 Read

Why Spotify Thinks Its Self-Driving Music Strategy Will Benefit Creators - Billboard x Medium

Cherie Hu, the author of this piece was at my birthday party this week and when I mentioned what I was doing my newsletter on this week, she said it sounded similar to a piece she wrote for Billboard’s Medium site. This is to say read Cherie’s article if you’re still wondering about how Spotify is trying position itself post-public offering.

The Odd of an Artist Becoming a “Top Tier” Earner on Spotify Today? Less Than 1 Percent - Music Business Worldwide
Unsurprisingly making it in music is still just playing the lottery with your dreams and self-worth.

Spotify’s Churn Rate and Inactive Subscribers: Should the Music Industry Be Concerned? - Billboard
Now, I really should be an entire newsletter about streaming metric and how many bad numbers there are in this new post-streaming space. That’s why I found this particular interesting because Cherie started to ask slightly bigger questions about what if the music industry centered on retaining consumers/fans for their monthly payment rather than a few brand new releases in a year.

Spotify Rival Saavn Merges with JioMusic in $1 Billion Valued Deal - Music Business Worldwide
Spotify this week said they hope to reach 100 million subscribers in 2018 along with a few other benchmarks for would be investors. I’d say with little additional knowledge that sounds reasonable, but longer term Spotify wants to expand more in markets like India. So the merger of Saavn and JioMusic is an interesting development in the what will be increasing fight for global music streaming. Related, the most popular music on YouTube isn’t Latin, but Indian.