Spotify, free or not?
There's an article on El Reg about Spotify and revenue. The outlook looks unlikely for it making any money. There's little to encourage people to sign up for the premium service. Certainly the pros (no ads) don't outweigh the cons (£9.99/month) for me. The peeps running it are floating the usual pipe dream ideas of social networking features for premium users, and beefing up the advertising to be better situated for marketing brands. The interesting point is that the recording companies own 30%.
So what's my view? I like spotify. It's got a good catalogue. The ads aren't nearly so frequent and intrusive as, say, commercial radio. So it's all win. But I'm a leech as far as they're concerned. There's two ways they can get money from me using spotify.
The first is advertising. My guess is that the current level of advertising isn't commercially viable. I know advertising works on small percentages but I just don't see spotify being in a position to charge enough for advertising to make money. It doesn't have the coverage yet, and I'd wager that the graphs of cost/user of bandwidth vs. ad revenue/user don't match up very well. Radio and TV get away with this model because they're broadcast media. They're cost/user tends to go down as the user count increases. They're problem now is simply getting enough users, what with so many more channels around. If spotify get more aggressive with advertising they're going to lose people like me who hate advertising. I'll go back to micro-managing my iPod and sticking to my own tunes.
The other possibility is premium. The thing is, I'm not going to fork out for premium simply to get rid of ads. Spotify isn't so essential to me. More to the point, it feels like paying for nothing. I get nothing tangible out of it. I hate paying to get rid of something distasteful (the ads). So what could premium offer me? The social services are a possibility but the more social services exist, the less social they become paradoxically. I've already got all the social interaction I want with stuff like LJ, Facebook and MSN. Sure, a decent music related social app might be nice. Last.fm never seemed to pick up on that properly for me, though maybe this is simply because so few friends use it. It's unlikely spotify can offer anything more, and anyway that isn't enough. It's still not tangible.
But then I pay a similar amount each month for online gaming. Nothing tangible there. I think the difference is that I very rarely listen to music as an activity in and of itself. I'll listen to it whilst gaming, or whilst working. If I do simply listen to music I'm going to be doing it somewhere away from a computer which pretty much boils down to physical media. Things are nearly there though. All I need is a bit of work and I'll get network/wifi sorted in the house so I can actually use my Slim Player. If I could get spotify on that then that might be worth £9.99/month. At that point it's pretty much never having to worry about where's that CD, or have I ripped that yet, or what if the disk goes belly up, or having to leave a PC on.
The question remains then. Is £9.99/month enough for them to make money off. I'm not convinced. Bag of a fag packet time. Listening at work 50% of the time (5x3.5*4), listening at home two evenings a week (2*3*4), and some weekend listening (2*3*4) which comes to about 120 hours of streamed music in a month. Even if I'm over estimating that, at half it is still 60 hours of streamed music. I've used about 150Mb on Spotify today alone. How much bandwidth does £9.99/month get you?
Is it a case of enjoy it whilst it lasts, or is this sort of service the way forward ... and how does it pay for itself?