Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them. I wouldn't be surprised if Spotify tried poaching higher-level strategy people from Netflix.
>"Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them."
This seems to be a common refrain that Spotify can just "pull a Netflix." And this is very unlikely.
Firstly no matter how much opriginal content they could create, if they don't have back catalog it's going to be a total non-starter for the mainstream. A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly.
Also music and movies occupy very different spaces in peoples lives - emotionally, socially, where and how they're consumed and shared etc.
People need music for their commute, for their workouts, for their parties, at bars and for their workdays. People only need movies when they're home or maybe stuck on an airplane.
Lastly Spotify needs to stay in the record label's good graces. If they were ever to be viewed as a competitor or a thread to any the big 3 record labels it would be reflected in punitive price increase when it came time to renegotiate their licensing deals.
> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly.
I disagree. I think for most people music is fungible; they just want something to listen to. I think Spotify can afford to have gaps in it's library. Sure, if a large enough portion of the music industry cut them off it would be an issue, but I don't think they're in imminent danger of that.
I think you underestimate the annoyance and frustration users feel when content disappears from their library. This is especially noticeable in playlists: when half of your favorite workout playlist suddenly disappears, it's not something you'll ignore easily.
People pay Spotify a monthly subscription for the convenience of being able to listen to the music of their choosing, at the time and place of their choosing. Anything that jeopardizes that convenience is going to be a problem.
It’s already happening, and it’s less of a problem than I thought it would be. Some of my playlists are 200+ tracks. A few songs go missing from time to time. I can never remember which tracks have gone, I just know something’s missing as the flow from song to song is off.
It’s extremely irritating, but not enough to make me go elsewhere as I can’t see any other service not having the same problem.
Best I can tell, this feature is only applicable if the track is not available in the region you're in, and/or for tracks that are 'local music' that haven't been syncned to the device you're playing on.
If a song is removed from Spotify entirely, it just disappears from the playlist.
I'd love to be proven wrong, however, and start to see all the tracks that have disappeared in the past!
Yeah, it's already happening, that's why I brought it up. Right now it's not a huge problem, because it doesn't happen too often or on a large scale. Like you said, it's usually a couple of songs in a larger playlist.
Now, imagine the scenario comparable to what @bogomipz said above: "no Beatles, Pink Floyd, No Motown, No AC/DC". I'm betting all of us would be a lot more frustrated and irritated than we are right now. Maybe you won't do anything about it. Maybe I won't, either. But it sounds plausible that a lot of people will, whether they switch to a different service, come up with a solution of their own or simply revert to piracy.
I’m curious. Do a lot of people actually use a single music streaming platform? As an avid music lover, I get my new doses from various services. Spotify is the only one that I pay for. I mainly use it to discover the latest mainstream stuff from genres I don’t typically listen to. But the Beatles? Come on, why isn’t that saved in your hard drive somewhere?
Because it’s included in my Spotify subscription. Why would I pay ~200 dollars to “own” all the Beatles albums when music ownership is basically worthless?
I don't think they would switch to another service, because another service is likely to suffer from the same problems of rotating availability. The only service I know of that doesn't suffer from that is piracy, which I don't think people will go back to on any significant scale.
Absolutely agree with your point. Happened to me a couple of times when the music just disappeared and I could not really understand the reason. Good, I am paying for a student (4.99 instead 9.99 per month), but it's still money and I expect the promised services to be fulfilled.
Indeed. Since the rise of ClearChannel in the '80's, the industry has been reducing the variety of popular music down to the chords, and repeats trite elements like the 'millennial whoop"*, as far as they can. Content for them is very much a simple commodity. The number of really successful songwriters is tiny.
Most people listen to top 40 music and artists, and not much else.
Most people on Spotify don't make their own playlists at all, and just rely on the ones that Spotify supplies in the Browse tab, or listen to albums.
From a quick scan of the friend activity pane, if Spotify only had music from the past 5 years, 80% of my friends would still be able to listen to their music.
People complaining about gaps in their library are a definite minority.
Spotify's catalog is so spotty that it is borderline useless for me. Most small indie labels still do not publish to Spotify
If you are the kind of person that will sometimes strongly desire to listen to only one song/style/artist, and that desire is so strong that nothing else satisfies it, then Spotify not having your track can be a big deal.
If I can't build a decent playlist because Spotify's lack of coverage, that's going to be a big deal to me.
The mainstream is not sensitive to nor do they care about the logistics of music distribution. I wish there was a way for Spotify to ignore these bullshit distribution deals because the only people who care about them are megalabels and their A&R reps. I don't know of a single artist making bank off streaming...
Spotify is mass market music platform, it's not meant to be an indie publishing platform, and it doesn't even make economic sense for indie artists to publish on Spotify.
It's like complaining about the lack of techno (especially remixes) on Spotify, that's what Beatport is for.
Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue? Netflix has plenty of third-party content. I would assume that Spotify's music licences are highly variable cost, ie almost entirely pay-per-stream. All they need to do is to get people to stream less licenced content and more own-produced.
>"Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue?"
If they start poaching artists from the labels who own the back catalog or if the labels start to see Spotify as a competitor instead of customer there will a reckoning when it comes time for Spotify to renegotiate their licensing terms with the labels.
And then of course there's the risk of becoming a record label. For every Bruno Mars that blows up there are 30 or 40 other artist that failed to break. And each of those flops costs money and requires resources such marketing, A&R people etc.
>"All they need to do is to get people to stream less licensed content and more own-produced"
People want to listen to what they want to listen to when they want to listen to it. That's the whole value proposition of streaming for users. If someone has a specific record or song in my mind you aren't just going to persuade them to try some "non-licensed" content instead. It's not a sports drink.
>"I would assume that Spotify's music licenses are highly variable cost, ie almost entirely pay-per-stream."
No its most certainly not pay as you go. In fact the labels demand a certain percentage up front.
Because people expect broad coverage in their music service. When I ask alexa to play a song and she doesn't know it, I am like wtf? But I don't care if Netflix doesn't have every Matrix movie, I just watch something else.
Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party.
> Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party.
You nailed it. Music has a fundamentally different mode of consumption from music. People consume music in so many different ways and contexts. Music doesn't always demand your attention like a sensory-engrossing medium (like movies). But when music demands your attention (like having to change providers to hear a specific song) it introduces friction that is unnatural to that medium.
I agree they have plenty in the sense that they have many more hours of it than I have time to watch.
However, in my experience in the UK, if you pick a well known film at random and look it up on Netflix, there's only about a 5% chance they'll have it.
Not the sort of library that will have users throwing away their personal collections.
.. unless the music labels object to the conflict of interest.
Spotify has a lot of competitors biting at it's heels, they're certainly the largest (and IMHO, best) at what they do, but they've by no means locked up the market.
They're not exactly at the mercy of the labels, but they probably can't afford to piss them off either.
The labels themselves are large shareholders in Spotify, so they would have to balance the monetization of their own artists with Spotify's label artists.
This could lead to cartel-like behavior among the stakeholder labels and crowd out the smaller players, but that's basically been happening in the industry for a long time so I'm not sure how big the impact would be.
Yeah i disagree. In 20 years, the Beatles and ac/dc will be less relevant and easier to live without. If Spotify start their own content channels now, and i imagine they have, the situation could easily be reversed, where they have exclusive rights to the content that others want.
Time will tell but i feel like this can go either way.
>" In 20 years, the Beatles and ac/dc will be less relevant and easier to live without."
If you made that statement I'm guessing that you don't realize that the Beatles have been relevant for 50 plus years now and AC/DC for 40 plus years.
They are so enduring because they are classics. It's amusing that you believe that when yet another generation discovers these artists they are somehow going to become less relevant.
Both of those artists that you used in your example were long time hold outs to allowing their music to be streamed. And it was huge news for Spotify when they were added to their catalog.
It's worth mentioned that Beatles tracks were streamed 50 million times in the first 48 hours that they were available for streaming.[1]
I’m not totally stupid (just a little...), of course they have been relevant for a long time, but i think their ability to be a differentiator in what people choose to pay for exponentially deminishes as time passes. They will matter to some for sure, but i doubt it’ll be enough to really make or break the offering. Also, maybe in 20 years they’ll manage to license the content?
They have been relevant, yes, but that doesn't mean their primary audience isn't aging. If you truly believe the Beatles and AC/DC are gaining more followers than they are losing, you are woefully out of touch.
Spotify was excited to get them because it means older people might join. A larger audience, that's it.
And you don’t think those folks weren’t streaming because they were heavily pushed towards it? First 48hrs is completely irrelevant, I want to see sustained numbers. I’m not saying the later numbers don’t show them leading still, I’m just saying your choice of facts doesn’t support the argument you are making.
>"And you don’t think those folks weren’t streaming because they were heavily pushed towards it?"
It's very bizarre that you don't understand the magnitude of the The Beatles. They are not something that requires a push.
So here's some number regarding the first 3 months of their catalog being available on Spotify:
"24 Million Hours Of Beatles Music Has Been Played In Their First 100 Days On Spotify
The company revealed today that in just over three months, people around the world have played 2,793 years worth of Beatles tunes.
Yes, that’s right — years. When that figure is broken down, it can be better understood as about one million days, or over 24 million hours. Considering that the average Beatles song is less than five minutes long, those 24 million hours multiply into several hundred million plays."
In fact, a conservative estimate of total Beatles plays on Spotify is still over a quarter of a billion. [1]
> It's very bizarre that you don't understand the magnitude of the The Beatles
I don't find it bizarre at all.
They are basically unplayed on UK broadcast radio nowadays and indeed for the past 30 years. I don't know if that is due to restrictive licensing or just lack of interest.
I am mid-40s and have never knowingly listened to an entire Beatles song. I've just asked my wife and she has never owned one of their CDs.
I don't know if they're even on YouTube. Edit: yes, their most popular song has 123 million views versus 3.2 billion for Gangnam Style.
My only peers who seem interested in the group and seek-out their music are musicians themselves.
Your original point was that millennials and younger love the Beatles on Spotify. How does this new reply show that?
I’m not sure why I’m bothering because you continue to miss the point and instead use multiple logical falicies to try to belabor your point. I get it, you have an obsession with this and you want to convince the world you’re right, doesn’t make it so.
I’m happy to be proven wrong as I have no skin in the game, but so far, you’ve not done so.
>"Your original point was that millennials and younger love the Beatles on Spotify"
No my original point was the value of back catalog.
While its unfortunate that you aren't able to follow the conversation, it's even more unfortunate that you insist on making comments when you have nothing of value to add.
This wouldn't make much of an impact because the statistical distribution of music listening time has an extremely long tail, i.e. the most popular songs are far more popular than even other very popular songs. In a given market, something like 90% of listening time will come from the top few hundred tracks, and 99% will come from the first couple thousand. Those top couple thousands tracks are already well-served by alternative distribution channels (youtube, "indie" labels, etc), so there isn't much room for disruption there. Starting a service to fight for that 1% of listening time will not move the needle.
source: I used to work in the data side of the music industry.
Why do you think Spotify has to ditch every other label when they start a new label? I think you're overblowing the power of music labels.
Indie and emerging artists aren't going to sign with a label if it means their music isn't available on Spotify, the #1 streaming service.
Music labels may have modestly more leverage, but it is not impossible for Spotify to start their own label while also maintaining relationships with existing ones.
The same reasoning would also have applied to Netflix when it was a younger company, though (i.e. back catalog, staying in the good graces of licensors, etc.).
Tidal has already been doing most of the stuff people are proposing here. It's a controversial topic but I don't think there is good evidence that music streaming services, from a business standpoint, shouldn't also be in the business of producing or sponsoring musicians.
How many shares do we think it would take to purchase a major record label at this point? What about a perpetual license to their content (since buying a label could be seen as anti-competitive)? This would certainly help avoid some of the down-side risk to the business. That said, their IPO didn't exactly help the company clear the working capital they'd need to do this.
Well there's no such things a "major record label" anymore. When people say "the Big 3" each of those three is global conglomerate. The result of years and years of consolidation.
Using the smallest of these 3 Time Warner Music Group, the company did $2.87 billion in revenue in 2013[1].
Let's say that Warner was actually interested in a sale. Let's say that the multiple they were looking for was 5x. Where is Spotify going to get the 15 billion dollars for that sale? Certainly not from this direct listing. And even if they had that cash what happens when you buy a 3,500 employee mega corporation? You actually have to run it and run it well.
It could easily stop including those if the record companies think Spotify is competing with them instead of helping them. I think that's the point being made: that back catalog is leverage that will stop Spotify from ever rocking the boat the way Netflix has.
They aren't saying Spotify doesn't _currently_ have those artists, they're saying that they wouldn't survive as a music streaming service _without_ them, as no one only listens to the latest and greatest, as many do with TV/Movies.
Thus, Spotify can't directly attempt to go in the same direction that Netflix did, as the other labels would see them attempting to compete and could possibly pull out, destroying any reason to use Spotify in the first place.
I'm not convinced. You don't consume music the way you consume TV shows and movies, it's often a more "passive" activity where you start a playlist in the background while you do other things. You can do that with movie/TV shows of course but a movie will last you ~two hours while a TV show can literally last you days or weeks at a time without input if you really like having The Office in the background while you do other things. Assuming that you can afford buying subscriptions to various services it's not massively annoying to have to use HBO Go to watch Westworld and Netflix to watch Arrested Development. It's not as good as having a unified service but it does the job.
If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. When I hear a song out there and I want to add it to my playlist I expect that it will be available on Spotify and the vast majority of the time I'm right.
If I need to go hunt for songs on various services and I can't easily make a single unified playlist with all of it I think it'll be back to piracy for me, it won't be less convenient and it'll be much cheaper.
I think Spotify's model would need to be slightly different to Netflix, I think they would still need to allow their artists music onto other platforms.
The need for them to be a record label is not for exclusivity, it is so they can operate as an equal partner. At the moment their entire business is based on negotiating deals with record labels, all Spotify can offer is revenue, so they will be squeezed and squeezed as each contract is negotiated and renegotiated.
Every artist that signs up to them will save them this cost in the long run... So I'm sure there'll be seemingly crazy deals like comedians have been striking with Netflix, which in the long run are will be very beneficial to Spotify.
Interesting thought. I've been very anti Spotify-as-a-label, but this is a really neat way of looking at it that I hadn't considered before. What if Spotify becomes a (small) label that's very artist-friendly? Then they can offer non-streaming distribution of their artists as a bargaining chip for existing labels.
My only issue here is that I'm not sure if existing labels will begrudge a new competitor on the block (and then try to kill Spotify). It doesn't seem to me like Spotify being a fellow label gives them much more that the existing labels would want, but maybe I'm just not thinking of it.
According to my memory and a little research [1], the record labels have some stock stake in Spotify. Personally I think this is Spotify's best bet: if the labels can derive stock gains from helping Spotify (plus licensing fees), they have skin in the game so they won't try to sabotage Spotify. I'm of the opinion that instead of trying to produce music (and fight the record labels), Spotify is better off getting into a complimentary position: make it easier for fans to find out about concert, purchase tickets at fair prices, and buy t-shirts. All stuff that Spotify can probably do better than the record labels, and which won't cut into label profits.
> If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker.
I have this problem with Spotify. About 80% of the music I like is on Spotify. Private label, soundcloud, older forgotten bands, and foreign music is often missing.
The problem with this approach is that there's so much music out there because it is way cheaper to make music than it is to make films and shows. Even if spotify was somehow able to sign the top artists, they just couldn't keep up with the influx of new artists coming up every single day.
Music lovers also tend to be very particular and nuanced about their taste in music. Therefore, if I as a consumer don't find my music on spotify it means I'd have no reason to subscribe nor come back to spotify.
I think we might be seeing a shift in how people consume music that Spotify is (better?) positioned to take advantage of.
First and foremost, I agree that Spotify will struggle if they try to compete with other services on providing all artists.
It seems like listeners (or perhaps a subset) are listening by genre rather than by artist. I know genres and waves of music are nothing new, but with the lower barriers to creation as well as to consumption [1], we are seeing the number and frequency of new genres and sub-genres increase dramatically.
Anecdotally, I find myself using radio based music a lot more. E.g. I have a Synthwave station on SoundCloud that I listen to. I think this style is further exemplified with the popularity of sharing Spotify playlists. This is also why I think Spotify in particular are ahead -- the very people who would listen to Spotify published content are the people that already use Spotify.
In fact, I think this style better fits a lot of people who would use a streaming service in the first place. A lot of the people who want to listen to their favorite artists question the idea of paying for a subscription to maintain access to their favorite albums.
Of course, if Spotify goes this route, they are not alone. They would have to compete with services like SoundCloud and BandCamp. I think they could find success by toeing the line between major label content and indie content.
[1]: e.g. a "bedroom musician" can make their album over the course of a few weeks and then that album gets bought and listened to by someone thousands of miles away within minutes/hours of release. No printing copies, shipping, stocking, ticket purchasing, etc.
Genre is a discovery hack. If you listen to "Reggae", that may be only because you know you like Bob Marley and the Wailers, but you don't necessarily already know that Peter Tosh plays similar music, or that Desmond Dekker is similar, but is actually considered Jamaican (First Wave) Ska. It won't be able to predict if you will also like or dislike Rage Against the Machine or Elvis Presley, or individual songs that an artist plays out of their normal genre.
If Spotify can solve discovery, by using actual human listening patterns, playlist contents, machine classifiers, or whatever else they may have at their disposal, it is much less important that they have licenses for all the most popular songs. The popular songs are the easiest way for the system to determine what kind of sound any given listener will like, but tuning the radio and auto-playlists to respond to likes, skips, and dislikes should be able to reveal the songs that people will like, from artists nobody has heard of [yet].
I think they're almost there. When I go to radio mode based on my "Liked from Radio" playlist, I want to also be able to specify between "I'm passively listening, so just play music I probably won't want to skip" and "play only new stuff, so I can actively train your algorithm". As it is, it mainly just plays things that are already on my list, and I have to skip ahead on everything I have already liked when I'm trying to train it.
The key issue is that if Spotify is the music discovery engine, people won't discover music that isn't on Spotify. You have to license to them, or you don't acquire new fans. It only helps them that broadcast radio has consolidated itself into a uniform ball of only the greatest hits by only the biggest stars.
Also I can listen to the same album over and over for hours on end, but once I've watched a TV series or movie I am unlikely to revisit it again for a decade. So exclusive TV/movie content has a "novelty appeal" that music doesn't.
I don't feel we're at the point of saying 'it's turning out well' for Netflix. For sure on the awards side of things and quality shows etc... but haven't they raised billions upon billions in debt to make these shows?
Their execution on doing their own content has been great. However the long term value of these movies / shows still has to prove out in profits at some point.
Starting their own label is biting the hand that feeds them, though. They need the libraries that the major labels have in order to stay in business.
Perhaps when they're not competing as heavily with Apple and to a lesser extent Google they could start their own label and the major labels would just have to deal with it, but I don't think it's a realistic course of action until then.
It would definitely be a good direciton to go in, but I suspect a major potential problem for Spotify will be the possibility that the major record labels pull their tracks off Spotify in retaliation.
This was less of an issue for Netflix as Netflix streaming already had an extremely limited selection of third-party licensed content.
Can you imagine if most new artists start signing with this supposed new label. If it happens Spotify will be a monopoly soon enough and artists will be in a way worse state than they are now.
Making a TV series or a movie is not the same as making Music. Artists sign with a label and they are more or less stuck with them.
Isnt that actually in the same vein as what Tidal did/is doing? They even had exclusives, and I dont really think, its working out for them. Worth remembering, that most artist dont make real money on streaming, they make money playing live, merch etc.
Publishing recordings of live performances is pretty different from having a division of the company dedicated to supporting the careers of an artist roster
I believe they are testing this in the 'generic' categories of music. Think elevator muzak - people want the ends and don't care about the means, so they can white label artists who make albums like "Ambient sleeping tones" or "Rain sounds" and algorithmically crowd out independent artists doing the same thing, thus getting a cut of the royalties in addition to the distribution fees.
I doubt the need to poach the people, just the strategy itself. Would likely be better to find people used to managing bands, or doing whichever relevant recording company position, at a high level I would suspect
If they start a label, I would hope that it doesn't try to compete with smaller record labels. It should compete with the big dogs and help out smaller ones similar to bandcamp. Idea: bandcamp + spotify...
If they start a label, the smaller labels will be the first one to feel the heat. Spotify would need to swallow them all to garner power so it can fight the bigger fish.
If Spotify start a label and is successful with it, the Music industry will most likely end up worse state than it is now.
