Why has Spotify not pushed harder to own their own content a la Netflix? That's the only reliable way to both have some control over margins and offer a non-commoditized product.
They have tons of data on user tastes, owning and operating a studio is cheap compared to licensing fees, so why not try to predict tastes (like Netflix), aggressively sign unheard of artists, and A|B test the hell out of the homepage with promoting different ones?
Apple has very deep coffers, which we have seen with the exclusive content they have acquired. Competing there seems like a loser's game.
Because they are two completely different mediums. Popular music is entrenched. If a service doesn't have my music I will not spend hours trying to CHANGE my preferences for "unfound" artists.
The music business isn't just about the musical content. Popularity is also driven by artists' branding. Promotion, etc. there's a strong fashion element to popular music that is outside of the scope of Spotify's core competencies.
They'd have to either acquire this or build it from scratch. That takes time.
I was thinking of that study where they basically showed that what was deemed popular was largely determined by availability.
Spotify owns a powerful platform with tons of data about user preferences, they are not completely powerless to flip things on their head and have some say about what is popular.
I think the point is that Spotify would need to have a promotion competency in addition to a production one. "Interesting music" is far more subjective than "interesting movies".
Netflix doesn't run a production company though, and they should if they want to remain competitive and have complete ownership over their products.
All they do is buy shows/movies from other studios. It would be similar to when Kanye West having the Life of Pablo exclusively on Tidal for a period of time. Exclusivity is important and Spotify does have albums and live performances that are not sold anywhere currently. Maybe they should do a better job of showcasing this.
Could you explain how platform exclusivity is a dark pattern?
When I think of dark patterns I think of misleading ways to get a customers information where not applicable. I don't see how it's a dark pattern if I can't watch Game of Thrones on Showtime or Orange is the New Black on Hulu.
Why is retaining rights over content creation a bad thing? Is it a dark pattern to have companies pay for licenses or copyright fees?
I've noticed many artists re-recording their music, separate from the original label they recorded on. I presume this is to get more money than they'd otherwise get (where they own the song lyrics, but not the original recording). Obviously this isn't Top 40 acts; I've mostly seen with older rappers.
They could also work with older bands that have long split to do a "reunion" exclusive to Spotify, ala Gilmore Girls.
There are also sources of mostly independent music. I've listened to Digitally Imported for years. As much as it may not be good for listeners like me, I think they'd make a great acquisition play for Spotify.
While I like your idea, the major Hollywood studios have no significant stake in Netflix while Spotify has nearly a 20% stake owned by the music labels. I doubt these labels would allow Spotify to create their own content. And if Spotify decided to do it anyway, their negotiations for the major label catalogs would push Spotify even further into the red.
Just wanted to break my normal spot in what could be the silent majority here to agree that the next big thing in streaming music may indeed be someone willing to start their own farm team (to use a baseball analogy).
Some good points have been made as pros and cons, but in my mind something different needs to be done.
Totally. Rather than a "nice to have", this might be an existential situation for Spotify. (I couldn't say confidently without seeing their financial statements)
TBH, a lot of what I currently listen to on Spotify is relatively unknown Synthwave bands/producers who generally self-publish on Bandcamp, maybe have Patreon etc.
I do not think Spotify should be trying to actually produce their own content in the way Netflix does, but I certainly do think there is scope to disrupt the traditional "music label" by helping to promote these independent artists, both online and in terms of tours, merchandise, etc.
I already find a lot of this via Discover Weekly, so it doesn't seem like a huge jump. The key is recognising that the era of pop music is over, just as the days when 50% of the nation would tune in to the same TV programme are over (with the possible exception of certain sporting events). Music is heading away from supergroups on labels like Sony BMG and promoted on MTV, towards a larger number of micro-brands serving individual tastes more closely.
Edit: I should add that it's also important to recognise the social aspect of music: what people listen to in clubs etc. This is where being on a label (currently) matters over just being on Bandcamp.
>> Music is heading away from supergroups on labels like Sony BMG and promoted on MTV, towards a larger number of micro-brands serving individual tastes more closely.
Any data to support this because from where I'm sitting, although the music industry is changing, the one place it isn't is as the top. I don't see the market for a small number of superstars owning the top 40 ever disappearing.
This assumes the top 40 holds the same relevance that it did in the 80s. Regardless, you no longer see the kind of chart-dominating power that say, U2 or Michael Jackson had in those days.
And while the record labels continue to pull in profits, there's no comparison between a top artist today compared to the 80s or 90s.
Top earners in 2013 each made about $30-$40m [1]. Michael Jackson in a good year made about as much the current top 10 combined [2], and still managed to make $160m in 2013 despite being dead [3].
>> you no longer see the kind of chart-dominating power that say, U2 or Michael Jackson had in those days
1. Comparing it financially true although I don't think that's fair as the economics of the industry are completely different, not because people are indulging in indie acts more but because music is cheaper generally.
2. I'm not a fan of Top 40 type music but I often look at the charts and it's always the same few people there (Rihanna, Major Lazer, Calvin Harris, Drake etc.). If you go to most clubs the music you hear is generally the Top 40.
So although the returns financially are less I think it's more because people are paying less, not because they are spreading the money around to more artists.
While an interesting direction to consider, don't forget what a ballsy thing that was of Netflix to do. It wasn't at all the obvious right thing to do. Not to mention how well they are executing on it, producing content at the same level (maybe even higher) as HBO et al.
>> Why has Spotify not pushed harder to own their own content a la Netflix?
The 'exclusive' content Apple Music does is very different to Netflix. It's just an exclusive publishing deal for a short period of time. They don't own the content. I don't think there is a deal possible that would convince an artist to sell their content to one company (e.g. Spotify). Consumers aren't going to change services to hear your music, what happens to your music when Spotify eventually dies or disappears as the medium changes again, and what about your die hard fans who want to give you lots of money by purchasing vinyl or other physical copies at shows?
What the parent's comment means is not that Spotify should buy works from artists, but that they should assume the role of the studio in creating new work that they would own.
I understood that. My point being that if Spotify did that and kept the content the themselves, like Netflix, it would be terrible for artists who need to have that content available in a wide variety of formats and stores. Also, considering the volatility of streaming services what would happen to that content if Spotify goes out of business? When you look at TV/movies Netflix there isn't much streaming competition. Outside the US there is Netflix and Prime so you're not really locking content in very much. With music not only are there about a dozen major streaming platforms but there are digital sales (iTunes) and multiple physical mediums available in stores and at concerts. The play would only make sense for Spotify if they were the sole provider and that just wouldn't work for artists as I don't see how they could grow with content availability limited so much.
I work for Spotify and I can tell you the company's spending is completely out of control. Between throwing parties where they fly every single employee out to Sweden to party or purchasing Echo Nest, only to ditch the tech later for in-house tech (Discover Weekly), they really have no clue how to manage their capital. We have nearly 2000 employees and no roadmap for profitability. Talk of an IPO has been ongoing since 2013 and employees can barely invest in the ESOP since the share price is so ridiculously priced at over $1000 a share.
Spotify has postponed the inevitable by granting shares of the corp to the companies they license music from. However, the time will come when the larger institutions want their money back and it's not going end pretty. They need to reduce their liabilities and reduce headcount ASAP.
Not only that, you guys seem to have a big amount of techincal debt. The macOS client was writing like.. 100-200Gb a day just a few months ago, and that was going on for months already until the noise about it picked up in the media. Now the macOS client (somehow its always the macOS client..) regularly starts using 90% CPU at random and doesn't stop until you kill the process. Again, has already been going on for some time and there's a forum post about it but no one is doing anything... do the Spotify guys not use their own client?
Then there's the myriad of obvious gaps in features that should be there.
1. You can 'Heart' a track in 'Daily Mix', but you can't un-'Heart' it.
1b. If you accidentally dislike an artist in daily mix, you can't undo that, so that artist won't play anymore.
2. You can like an artist for a certain Radio (and remove the like in the playlist 'liked by radio') but you can't remove an 'unlike'.
3. You can have either a public playlist controlled by you, or a collaborative playlist that's secret. Why not a public collaborative playlist for which I can select which users can edit it?
With most of the above issues there's one overarching thing: counter-intuitivity. You can often do an action (heart, like, etc.), and do so by tapping or clicking on something, but tapping or clicking on the same thing doesn't undo the action (probably because you can't undo the action).. and wouldn't you want to have your friends be able to see/follow your playlist that you built with that one Techno-listening buddy without granting them all editing rights?
I still like Spotify because you have the largest library and are available on the most platforms (Windows/Linux/macOS/Chromecast/Sonos/Digt.Amplifiers/PS4), but its a choice of 'sucks the least' rather than 'is the best'.
Not to mention the 10,000 limit on tracks saved to your collection. Which is insane considering that Spotify doesn't distinguish between saved albums and tracks — saving an album is exactly the same as saving all the tracks in that album. A 10,000-track "library" is not a very big collection!
Personally, I've been creating individual playlists for every artist I care about, organized in folders by genre, since those tools were always lacking. So when I ran into the aforementioned limit, I just un-saved all the tracks and went back to solely using playlists.
A few months ago I considered switching to Apple Music, which does this stuff correctly, but nobody has made a migration tool that works.
(Apple Music also has several features Spotify ought to have had a long time ago. A sane distinction between composer and performer for classical music is one. Another is the completely seamless syncing of downloaded music — purchased, encoded or whatever — between all devices. Spotify only supports "offline sync" if you have Spotify open on the machine that has the files.)
sounds like a ship that rats would start deserting, and I know what I'd do if I were in that situation (spend as much as possible on short term perks, and cashout at the earliest opportunity).
This is a symptom of a heavily mobile-first strategy. There are many developers at Spotify passionate about improving the desktop platform - and not just for feature parity with mobile.
Hi, I also work at Spotify. It sounds like you have a better idea about the share price being so high - once we do IPO do you think it will convert to a reasonable price per share? I was really surprised (and disappointed) when the $Xk amount in stock options I was granted only worked out to be a total of approx 30 options... Will the $1000+ per share convert to say 50 shares priced at $20 each once IPO happens?
I would also like to hear how you know about these financial incentives for VPs, I guess as a newish employee I am not privy to this sort of info or am not in the right backchannels :(
I don't know what you do at Spotify but I have seen some of your company pitch books and your two paragraph analysis is one of the best succinct descriptions of the company I have read anywhere. Hope you're in management, if not you should be. Good luck.
On the other hand, from the perspective of an end user, Spotify has a huge (probably the best) catalogue and I routinely discover good music via `Discover Weekly`, while Google Play so far failed to achieve something similar, although I buy all my mp3s there (which is much better data).
Can't say much about iTunes. SoundCloud is the best for discovering recent and unreleased electronic music.
I would much like them and Spotify to stay independent and not be gobbled up.
You can't do much until an IPO happens, unless you think they'll have some big public mistakes / downfalls (which cause a lot of users to leave) prior to that in which case share price of its competitors may go up (Apple Music, Pandora, possibly Amazon/Google).
Are the subscription models by these streaming services really sustainable? It seems like the licensing agreements were made before the real value of the content, enabling generous promotions and even a free model. I imagine the reduction of costs brought about by digital distribution back when iTunes first launched made it a much more viable option, but now that those savings are baked into the modern music industry how much lower can prices get before it's unprofitable?
Not particularly when you consider that Spotify's contracts with content providers obligate a 70% cut. The skunkworks projects to capitalize on data/ads/listening behavior/etc. have not cumulated into considerable value for the company. The focus for the company has been and always will be GROWTH in the form of monthly active users. Streaming music will never be a cash cow. The margins aren't there.
"Investors, according to the Wall Street Journal, will be able to convert the debt into Spotify shares at a 20 percent discount if the company has a public offering in the next year, with that discount rising two and a half percent every six months Spotify doesn’t go public.
Until then, Spotify will also pay a five percent interest rate on the debt. That’s an amazing investment for those who were given the opportunity to make it — five percent on their money up front, and a huge discount on stock when Spotify goes public. Essentially, if Spotify doesn’t immediately go under, they stand to make a lot of money on their initial investment no matter what happens."
"if Spotify doesn’t immediately go under, they stand to make a lot of money on their initial investment no matter what happens"
I don't understand your logic; it's not "when spotty goes public"; it's "if Spotify goes public".
If, say, Spotify doesn't go public (yet) and goes down after X years, they will have received 5X% of their investment back in interests, and will have the rights to buy lots of by then worthless Spotify shares at an enormous discount. For X < 10, I don't see that as making money at all; X = 10 might sort-of break even.
I think Spotify had to give them those share options to get that 5% interest rate because investing in Spotify is risky.
Convertible debt as to not dilute the share pool. As is typical, there are also financial incentives to VPs to make the IPO happen in time. It would be very interesting to know if the lenders of the 1B anticipated this and are planning to immediately offload their highly discounted stock before shredding the company to pieces for their 1B. Might be hard, considering the massive liability they're taking on with the new New York office.
Even in such a scenario the $1B would be offloaded to investment banks during the road show who will in turn off load it at the IPO price to its client base.
They won't dump it into the open market on opening day.
Why would investors choose to renegotiate? They seem to have all the leverage here. Spotify also have shown no history for meeting their commitments to stakeholders
Why would Apple buy Spotify? Or Google, for that matter? Both already have streaming services. Spotify has some nice features but I'm not convinced they're worth all that much money in the end.
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[ 6.9 ms ] story [ 156 ms ] threadThey have tons of data on user tastes, owning and operating a studio is cheap compared to licensing fees, so why not try to predict tastes (like Netflix), aggressively sign unheard of artists, and A|B test the hell out of the homepage with promoting different ones?
Apple has very deep coffers, which we have seen with the exclusive content they have acquired. Competing there seems like a loser's game.
Remember when people used to (and still do sometimes) complain about Netflix not having some specific movie they wanted to watch at the moment?
They'd have to either acquire this or build it from scratch. That takes time.
Spotify owns a powerful platform with tons of data about user preferences, they are not completely powerless to flip things on their head and have some say about what is popular.
It does seem like Netflix's playbook would be more difficult to copy for music, but still an interesting prospect to consider.
All they do is buy shows/movies from other studios. It would be similar to when Kanye West having the Life of Pablo exclusively on Tidal for a period of time. Exclusivity is important and Spotify does have albums and live performances that are not sold anywhere currently. Maybe they should do a better job of showcasing this.
I'm perfectly happy paying for media. But if something isn't readily available, I'll probably end up pirating it or never listen to it.
When I think of dark patterns I think of misleading ways to get a customers information where not applicable. I don't see how it's a dark pattern if I can't watch Game of Thrones on Showtime or Orange is the New Black on Hulu.
Why is retaining rights over content creation a bad thing? Is it a dark pattern to have companies pay for licenses or copyright fees?
They could also work with older bands that have long split to do a "reunion" exclusive to Spotify, ala Gilmore Girls.
There are also sources of mostly independent music. I've listened to Digitally Imported for years. As much as it may not be good for listeners like me, I think they'd make a great acquisition play for Spotify.
Some good points have been made as pros and cons, but in my mind something different needs to be done.
Edit: See the http://pledgemusic.com acquisition of http://noisetrade.com and http://set.fm nearly a year ago; no idea how it's working out for them though!
For the reference, Bandcamp is growing quite well.
I do not think Spotify should be trying to actually produce their own content in the way Netflix does, but I certainly do think there is scope to disrupt the traditional "music label" by helping to promote these independent artists, both online and in terms of tours, merchandise, etc.
I already find a lot of this via Discover Weekly, so it doesn't seem like a huge jump. The key is recognising that the era of pop music is over, just as the days when 50% of the nation would tune in to the same TV programme are over (with the possible exception of certain sporting events). Music is heading away from supergroups on labels like Sony BMG and promoted on MTV, towards a larger number of micro-brands serving individual tastes more closely.
Edit: I should add that it's also important to recognise the social aspect of music: what people listen to in clubs etc. This is where being on a label (currently) matters over just being on Bandcamp.
Any data to support this because from where I'm sitting, although the music industry is changing, the one place it isn't is as the top. I don't see the market for a small number of superstars owning the top 40 ever disappearing.
And while the record labels continue to pull in profits, there's no comparison between a top artist today compared to the 80s or 90s.
Top earners in 2013 each made about $30-$40m [1]. Michael Jackson in a good year made about as much the current top 10 combined [2], and still managed to make $160m in 2013 despite being dead [3].
[1] http://www.billboard.com/articles/list/5930326/music-s-top-4...
[2] https://www.forbes.com/pictures/geeg45eggig/michael-jacksons...
[3] http://www.telegraph.co.uk/culture/music/michael-jackson/104...
1. Comparing it financially true although I don't think that's fair as the economics of the industry are completely different, not because people are indulging in indie acts more but because music is cheaper generally.
2. I'm not a fan of Top 40 type music but I often look at the charts and it's always the same few people there (Rihanna, Major Lazer, Calvin Harris, Drake etc.). If you go to most clubs the music you hear is generally the Top 40.
So although the returns financially are less I think it's more because people are paying less, not because they are spreading the money around to more artists.
Because, unlike Netflix, that would be a huge increase in the amount Spotify pays to license their product.
Spotify is sunk. I just wish they would go under faster so that we could get something that might actually have, you know, a business model.
I always feel like that they avoid special effects and CGI on purpose in the Netflix series.
It is way to obvious that they want to save money there. Even if it means that the story (line) and world building looks and feels wrong.
The 'exclusive' content Apple Music does is very different to Netflix. It's just an exclusive publishing deal for a short period of time. They don't own the content. I don't think there is a deal possible that would convince an artist to sell their content to one company (e.g. Spotify). Consumers aren't going to change services to hear your music, what happens to your music when Spotify eventually dies or disappears as the medium changes again, and what about your die hard fans who want to give you lots of money by purchasing vinyl or other physical copies at shows?
See Square IPo for reference, as well as Spotify's terms discussed in this article.
Spotify has postponed the inevitable by granting shares of the corp to the companies they license music from. However, the time will come when the larger institutions want their money back and it's not going end pretty. They need to reduce their liabilities and reduce headcount ASAP.
Then there's the myriad of obvious gaps in features that should be there.
1. You can 'Heart' a track in 'Daily Mix', but you can't un-'Heart' it.
1b. If you accidentally dislike an artist in daily mix, you can't undo that, so that artist won't play anymore.
2. You can like an artist for a certain Radio (and remove the like in the playlist 'liked by radio') but you can't remove an 'unlike'.
3. You can have either a public playlist controlled by you, or a collaborative playlist that's secret. Why not a public collaborative playlist for which I can select which users can edit it?
With most of the above issues there's one overarching thing: counter-intuitivity. You can often do an action (heart, like, etc.), and do so by tapping or clicking on something, but tapping or clicking on the same thing doesn't undo the action (probably because you can't undo the action).. and wouldn't you want to have your friends be able to see/follow your playlist that you built with that one Techno-listening buddy without granting them all editing rights?
I still like Spotify because you have the largest library and are available on the most platforms (Windows/Linux/macOS/Chromecast/Sonos/Digt.Amplifiers/PS4), but its a choice of 'sucks the least' rather than 'is the best'.
Personally, I've been creating individual playlists for every artist I care about, organized in folders by genre, since those tools were always lacking. So when I ran into the aforementioned limit, I just un-saved all the tracks and went back to solely using playlists.
A few months ago I considered switching to Apple Music, which does this stuff correctly, but nobody has made a migration tool that works.
(Apple Music also has several features Spotify ought to have had a long time ago. A sane distinction between composer and performer for classical music is one. Another is the completely seamless syncing of downloaded music — purchased, encoded or whatever — between all devices. Spotify only supports "offline sync" if you have Spotify open on the machine that has the files.)
[0]: https://appsto.re/us/MmCCbb.i
1. Tap the More Options button in the navbar of a playlist
2. Tap Edit
3. Tap the Delete icon next to any of the tracks and tap Delete to confirm
sounds like a ship that rats would start deserting, and I know what I'd do if I were in that situation (spend as much as possible on short term perks, and cashout at the earliest opportunity).
I would also like to hear how you know about these financial incentives for VPs, I guess as a newish employee I am not privy to this sort of info or am not in the right backchannels :(
Remove the numbers immediately if you want to stay an anonymous
"Investors, according to the Wall Street Journal, will be able to convert the debt into Spotify shares at a 20 percent discount if the company has a public offering in the next year, with that discount rising two and a half percent every six months Spotify doesn’t go public.
Until then, Spotify will also pay a five percent interest rate on the debt. That’s an amazing investment for those who were given the opportunity to make it — five percent on their money up front, and a huge discount on stock when Spotify goes public. Essentially, if Spotify doesn’t immediately go under, they stand to make a lot of money on their initial investment no matter what happens."
I don't understand your logic; it's not "when spotty goes public"; it's "if Spotify goes public".
If, say, Spotify doesn't go public (yet) and goes down after X years, they will have received 5X% of their investment back in interests, and will have the rights to buy lots of by then worthless Spotify shares at an enormous discount. For X < 10, I don't see that as making money at all; X = 10 might sort-of break even.
I think Spotify had to give them those share options to get that 5% interest rate because investing in Spotify is risky.
They won't dump it into the open market on opening day.
And considering that Amazon, Google, and Microsoft all have their own streaming services, I don't see anywhere for Spotify to go when they fail.