Spotify announced yesterday that is has added support for Symbian smartphones. Symbian is used by Nokia, SonyEricsson and Samsung. This has been a long awaited release as Symbian is still the most widespread phone OS around, thus dramatically increasing the potential for new Spotify users. While being a nice update and all, there might be something else in the makes regarding these application platforms. While many companies port their software to multiple platforms, not many are able to take advantage of them to the extent Spotify does. Earlier this month Spotify announced that it has signed a deal with 3 UK to distribute HTC phones with Spotify premium included. This may be the route Spotify is more eagerly going to take in the near future regarding other operators in Europe as well.
The reason is very simple, they have not been able to build enough conversion from the free userbase to the premium subscription model. I’m not blaming them for not trying – a ton of other companies have tried to capitalise on music and failed. Thus, it’s worthwhile to explore other means of building up your paying customer base – including through deals such as these with operators. If we look at it, Spotify is receiving money from two markets – the media sales and subscription payments. Media sales currently aren’t doing too well even though I’ve heard a lot more advertisements being played in Spotify.
Another sign of the business side of things that will need urgent attention is the low payouts it is paying artists. We previously wrote about a Finnish band receiving 30 cents for 100 album plays. This time Lady Gaga has reported that she is receiving $167 US for a million playbacks. That’s about 0,0001 euros per playback. Not much of an option to pay the rent with this. TorrentFreak reports that it’s not Spotify who’s ripping off the artists in this new model. According to them it’s the labels that are doing it. Be it one or the other – the service will fall if it fails to keep both users and labels happy.
Nevertheless, Spotify is doing a superb job so far with the user logic and interface in their products. The video below shows how well they’ve managed to harness the Symbian platform to their look and feel.
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Antti you are very right.when both parties are disgruntled it will fail miserably.they had a n idea but peanut payments will not help at all.How on earth do you expect some one like Lady Gaga to earn mere $167 for a million playback?that is ridiculous and will not work in the long.am not a prophet of doom but their original idea has been diluted and they are headed to the dogs.wish them well though but even the most optimistic cannot see it surviving.
Those Lady Gaga numbers doesn´t really say much. They are from the first months after the service launched, when Spotify was in it´early infancy. Furthermore that number only reflects income made in Sweden (one in six countries) And it only takes into consideration what the the Swedish collecting society got for the lady gaga-plays. Lady Gaga probably got more, depending on what kind of deal she has with her record label. I think it´s also important to point out that Lady Gaga herself hasn´t reported anything, Swedish tabloid Expressen simply got hold of stim (swedish collecting society) earnings from late 2008 and early 2009 and decided it was time to write an article. And when Expressen says something regarding tech, the blogs will follow. It would be fascinating to see if it will ever be the other way around, that blogs do some work themselves, and perhaps papers will follow…
Agree.
As a comparison I’ve listened my favorite song over 300 times according to last.fm. So if a song is worth of 1€ in iTunes, I have paid 0,00333€ per playback, so it’s about 33x more what Lady Gaga is getting.
The song is actually just released last year so it doesn’t take into account how many times I might listen it in say next 10 years, and there only so many times one person can listen a song during a day.
A hit song, and thousands or millions of people can quite easily top that 33x difference in revenue in time since a) not all would buy your song b) you continue getting money everytime somebody listens your song(as in the old prepayment model you shouldn’t expect any more than 1€ per listener)
Probably the deals & revenue collecting mechanisms could be better for the artists but if you think about – it’s not that bad.
I think Steve Lawson sums the situation up pretty well:
http://www.stevelawson.net/wordpress/2009/11/if-spotify-is-the-new-radio-the-artists-are-winning/
Lady Gaga probably gets a million streams a week by now, and lets not forget that Spotify is built to scale. USA and China are next up. When Spotify penetrates those markets i think revenues will start to get really interesting..
Spotify is a lot more pretty on XM 5800 phones…