Show me the money

Nacho — Fri, 22 Apr 2011 16:19:56 +0000

I have written a couple of times about Spotify, the music service over the Internet that has been a revolution in Europe in the last years. Spotify offers almost all kind of music though the Internet and with a great quality. Furthermore, the offering is totally legal, as they have reached agreements with many record companies. These companies are paid thanks to the advertisement that were played to the free users, and from the fees paid by the premium users, who got the advantage of getting rid of the ads, as well as being able to use Spotify on their phones.

This was working pretty well, or at least that was Spotify’s statements, and the income obtained from premium users and advertisers was covering the expenses. That was really fine for people like me, who do not listen to music too often, and some ads from time to time was worth if that allowed us to keep saving the fee (10 euro per month). I liked the idea of having access to most of the music I normally listen to, as well as being completely legal. I do believe people who create things need to get money for their work, but this should have reasonable prices. Furthermore, Spotify had managed to get a good amount of premium users who together with the advertisements were supossed to be generating income and covering the expenses.

Now, they have changed the policy for the free users, and created an intermediate category to pay. The free users can only listen to several hours of music, cannot repeat more than a certain time each song, and cannot be social. The new unlimited users have no restrictions on what they listen to, as long as they are in a connected computer (no mobile phone or offline play). And they want to charge us 5 euro per month for that, 60 euro per year. Is it worth it? They are a company and are offering us a service which we can pay, or just keep on downloading music from other sources. For me, Spotify is a wonderful service that has kept me away of any downloading website for months, as it is really convenient. 5 euro per month, even not listening much to music, is not a big amount of money: not many more than 3 soft drinks or coffees in the city where I live.

If you think it is not fair, and you do not want to pay… perfect, don’t do it. Nobody obliges you, but Spotify is using the wonderful service they have to get what they need: money.

Spotify: some figures

Nacho — Thu, 21 Jan 2010 23:00:34 +0000

I just arrived to this article in The Telegraph where an executive from Universal Music, discloses a couple of facts from Spotify which I find quite interesting.

First, Spotify has two forms of paying to the record labels for the music royalties:

On a per stream basis (so, every time you play a song in your Spotify, they pay to the corresponding label). This is done in Spain and UK.
As a percentage from the income (subscriptions and advertisement). This is done in Scandinavian countries (Norway, Sweden and Finland), and in France.

Secondly, the article gives information about the break-even point for Spotify. Spotify needs around a 10% of the total users to be subscribed to the premium service to start earning money…

And last but not least, that break-even has been reached everywhere except in Spain and UK (funny enough, those places where the “per stream” policy prevails). The article also mentions that it is being tough in these countries, due to the huge acceptance Spotify has had… As they say: “it was a more difficult task to convert 10 per cent of a much larger number into subscribers”, and that is the reason why it is so difficult to get invitations lately.

Olemiswebs » spotify

Show me the money

Spotify: some figures