WHO’S AFRAID OF SPOTIFY?
Last week, there was a lot of news concerning Spotify resulting from some bogus information that was fed to the industry press. I guess some people in the business don’t want to make things easy for them to launch in the US. But why?
Rumours have abounded that one of the major labels is pushing back, because they have some ridiculous idea that by allowing Spotify to duplicate its model in the US, would be tantamount to giving away their content. Evidently they believe that the Spotify freemium model, that has been quite successful in Europe, won’t work in the US. Frankly, I don’t get the logic behind that. But then again, I haven’t had a major label lobotomy either.
If you look closely at the landscape of US music services that some would consider Spotify competitors, you’re basically looking at Rhapsody, Napster, Rdio and Mog. Both Rhapsody and Napster have in the neighbourhood of 500,000 subscribers each (some say those numbers are slowly dwindling). Rhapsody has been around for about 10 years and Napster for about seven! I would be very surprised if Mog has 30,000 subscribers, and certainly no more than 50,000, but that could change drastically with their new mobile application. Rdio, though the better of the two newbies, seems to be getting even less traction. Spotify, on the other hand, has acquired over 500,000 paid subscribers since last September.
And don’t get me started on MySpace Music. As everyone knows by now, anything MySpace is pretty lame and the service is a total dud.
Now, why is Spotify getting a higher rate of subscribers than services that have either been around for years, or even newer services that are trying to duplicate the Spotify model?
For one thing, people aren’t going to subscribe to a music service after a 3-day trial period. Spotify has gained traction, because once users live with the ad-supported service long enough, they become very attached to it and want to get a premium service. I have many friends in Europe who can’t live without their premium Spotify. They just love it and they’re passionate about it. The ad-supported service level is critical in converting users into buyers.
Another important and highly overlooked reason is that Spotify simply just rocks. It works better than anything out there. The user experience is spot on and the subscribers feel like they’re getting value. I guess that some just think that the US consumers have set the bar so low that they won’t cotton on to a really great quality service. Is the thinking that, whatever Europeans like, Americans won’t? It’s kind of like saying that BMW or Mercedes would never sell in the US because Americans only want Fords and Chevrolets.
The fact is that none of the other services are like Spotify. They try to copy some of the features, but have not put together the whole enchilada. What the obstructionists have to come to grips with is, of the existing US streaming and cloud-based services, Spotify is the only thing close to being a real game changer.
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