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I early got a Spotify account, but was quite slow in starting to use it. With the release of the client for the iPhone, I became a paying customer. The first month has now come to an end, and I am close to say, I couldn’t live without it!

What is Spotify?

A short introduction to Spotify is probably in place, as the service currently is only available in Europe. Spotify is a proprietary peer-to-peer music streaming service that allows instant listening to specific tracks or albums with almost no buffering delay. Music can be browsed by artists, albums or created playlists as well as by direct searches. Although, due to the system’s DRM, it is not possible to save the streamed music for use outside the application.

The desktop client is only availble for Windows and MacOS X, but I’ve been told that the program also can run on Linux and FreeBSD using Wine. Two mobile versions are also available, for iPhone and Android. A Symbian S60 version is currently in development.

Spotify comes in two versions: Free (comes with advertisment) and Premium. The get a Free account, you will need an invite from a paying customer (Premium). Premium listeners get 2 invites a month. Your Spotify account can only be online on one machine/device at the time. Something I noticed when turning on Spotify on my iPod Touch with Spotify already running on my desktop computer. I was automatically notified on the computer that I had signed in somewhere else and music stopped playing.

Music Selection

Select any album of any artist you know, and you will be impressed. I found the local hero from the village next to my hometown, Tønes. All his albums are already made available on Spotify. You also get a full discography of all albums released by the artist. You get a radio station which includes the artist you have listened to and others in a similar genre/popularity group. A bit like iTunes Genius.

You will find that all major record labels – and a lot of indies, are available on Spotify. And Spotify is legal, no doubt about that. But, and there is a big but: The major labels received 18% of Spotify shares. Merlin, who represent a large portion of the independent labels, received 1% (as their labels represent 11-12% of Spotify plays, it appears this is a bit disproportionate to the value of their content). What they paid for their shares is still under debate, with ComputerSweden reporting that it was as little as $10,000. So let us say that the business model introduced with Spotify works for the record labels. Artists on the other hand, are being paid peanuts! In Sweden, where Spotify has been running the longest, Magnus Uggla – well-established since the late 70s – has withdrawn his music from the service. On his blog he said that, after six months on the site he’d earned “what a mediocre busker could earn in a day”. Regarding his record label, Sony Music, he says “after suing the shit out of Pirate Bay, they’re acting just like them by not paying the artists”. When he found out that Sony had 5.8% equity in Spotify he wrote: “I would rather be raped by Pirate Bay than fucked up the ass by (Sony boss) Hasse Breitholtz and Sony Music and will remove all of my songs from Spotify pending an honest service.” The Norwegian band Kaizers Orchestra had been streamed/played 130.000 times between April and July, and the payment from Spotify was 18 NOK.

Dagens Næringsliv recently wrote that artists like Marit Larsen, Lene Marlin and Vamp were threatning to pull their music from Spotify. The artist manager Jan Paulsen, who represents Vamp and other bands, said to the newspaper that the album «St. Mandag» had been listened to a 100.000 times on the service and the band’s hit «Tir na Noir» had been played 50.000 times. And he only received the total amount of  800 NOK for all his artists on Spotify.

According to The Economist, in the of writing (end of July) Spotify only had some 40.000 paying customers. Their total amount of users were at the same time around 6 million. I was first a freerider and I can only say there wasn’t much of advertisment, other then for the Spotify service itself! I can only conclude that back then Spotify didn’t have much of an income to talk about. This might have changed with the introduction of clients for mobile phones, which was when I decided to subscribe. I guess many did just like me. But Spotify is far off from their goals on 20% of the users of the service should be paying customers!

A possible outcome of the lack of payment to the artists and their managers, could be to wait 2-3 months with giving out their new albums on Spotify, and only release the albums when the traditional sales have gone down and the albums are sold to a lower price in the shops. But recently the Swedish department of Universal said that they were earning more money on Spotify then on iTunes, so deciding to delay releases on Spotify will not be an easy decission to make.

Some Norwegian artist managers have openly said that they look forward to opening of the competing service Wimp. The service is quite similar to Spotify, the desktop version only lets you stream music, but also lets you buy albums or songs from within the player. It will only be for paying customers, so no openings for freeriders. I honest to god hated the user interface on Wimp, and started using Spotify more in the period when I was signed up to beta test Wimp. I haven’t used Wimp for two months now, and don’t even know if I have access any more.

It’s nice to know that more and more people choose streaming services instead of downloading music unlegally, but the industry needs to find a valid business model, one that works both for labels and the artists! For now, only a few artists have resigned, for instance Bob Dylan and Oasis. I discovered Camera Obscura on Spotify with the help of the web services Last.fm and underskog.no, and went to Parkteateret on a concert with them. So I guess Spotify is a great advertisment channel for smaller bands and labels. Pretty much in the same way as MySpace. Just so much more user friendly. But Spotify might have stopped me from buying albums on CD and even from buying songs on iTunes Music Store.

Changing listening habits

When I got my Apple TV in the house, I decided to rip all my music and put the CDs away. I even took out the CD player from my homecinema bench! From that point on, I have only been streaming music in my livingroom. All the music was on my main computer in the home office.

With Spotify it seems that I have already gone further. I om only using iTunes to get access to the podcasts that I listen to. All the ripped MP3s are kept on two external disks. I have found most of the albums that I own on Spotify, made some playlists linking them up and discovered a lot of the artists from small labels that I guess I would have never found in the shops or on iTunes. I can’t complain on the sound quality, it is the highest bitrate possible with Ogg Vorbis (Premium listeners get a higher bitrate then the Free listeners). The desktop clients doesn’t stand back in useability compared to Windows Media Player or iTunes, so you will most likely not miss them.

I stopped using iTunes for music playback when Spotify for iPhone got released. Streaming music to the iPhone over 3G doesn’t work to well, but having two playlists with my favourite music available offline on the phone is just brilliant. Recently Premium users got the option to also do this on computers, letting people bring their music with them on their laptops. All the music I listen to on my computers get scrobbled and my listening habits appear on Last.fm. I miss that functionality on the iPhone client, cause mostly listen to music when I’m on the go…

Competing with who?

Music shops were already suffering before Spotify opened it’s services, and I can only name one music/video chain here in Norway, and that is Platekompaniet.

When I started writing this blog entry, I had to think back on what was the last album I bought. Honestly, I am still not sure. I haven’t bought music since last summer, not on CD or on iTMS, and I think that the last music I bought was actually two songs on iTMS.  Think about it, the monthly fee for Premium account on Spotify is more or less the same as one Nice Price CD in a shop. I used to buy 10-12 CDs a year, and mostly Nice Price CDs. With such a low subscription fee, why should I continue buying music?

I guess Platekompaniet is seeing a drop in the music sales in the shops. They recently started selling MP3s on their web shop and they are one of the companies the soon to come competitor to Spotify, Wimp. I already mentioned that I didn’t like the user interface of Wimp, and I most also say that I disliked that music only could be bought through your mobile phone provider. People with business phones are then cut off from buying music. I’m not sure that this is a wise decission.

Spotify for now remains alone on the top. A technically brilliant and userfriendly service, with a horrible business model.