SPOTIFY

Spotify streams into America's digital clouds

By MATT ASHARE |
Published: December 13, 2011 

FUTURE TENSE: Is Spotify more than just another cloud?

Last week Rolling Stone published – and posted — its picks for the top 50 albums of 2011. Nothing new about that: the 44 year-old music magazine has been putting together an annual best-of list since as far back as I can remember. But this year, the on-line version includes a new feature — one that may portend a major change in the digital landscape. Underneath each of the 50 entries there's a little green tab that reads, "Listen on Spotify." A quick click on that link takes the user to the latest great hype in the realm of music, the Swedish-born, UK-based on-line service that conquered Europe, has partnered with Facebook, and is now making inroads here in the US. With deals in place with all four American major labels (EMI, Sony, Universal, and Warner Bros.), Spotify offers instant access to an enormous catalog of albums, along with a number of other features that are making it an appealing alternative/adjunct to Apple's dominant iTunes, as well as so-called "cloud-based" services like Pandora, Rhapsody, MOG, and Rdio.

       As is usually the case, the Rolling Stone top 50 includes a number of albums that I've had on heavy rotation since their release: the Decemberists' The King Is Dead; Radiohead's The King of Limbs; and Wilco's The Whole Love. But the top three finishers — Adele's 21, the Jay-Z/Kanye West collab Watch the Throne, and Paul Simon's So Beautiful or So What — are discs that I never really got around to checking out. No surprise there, given my particular tastes, the sheer amount of music that comes out every year, and the woefully finite number of hours any one person can devote to listening to, much less sorting through, incoming downloads and stacks of CDs. In past years, I might have scrambled to find copies of those discs, looked for an on-line stream of a track or two, or dialed up some YouTube videos. Not this time: a simple click on the Spotify logo and all three albums were, well, right there at my fingertips. No muss, no fuss, and, more importantly, no fees.

       As Crispen Stanbach, a 20 year-old Randolph College junior who serves as chief engineer for the school's internet radio station (WWRM) and hosts a weekly Wednesday night music and talk show called "Cogito Ergo Voro" (Latin for "I think therefore I devour"), explains, "I like music reviews. They're my favorite thing to read on the internet. And now, with Spotify, I can read a review, type that album into Spotify, and be listening to it in seconds. I don't have to pirate that album. I don't have to look around online to see if it's streaming somewhere. It's just all in one place. It's just this amazing thing, where as soon as your hear about an album, you can be listening to it, deciding whether or not you want to buy it, deciding whether or not you want to find out more about that artist. . . it's just so easy."

       You do need a Facebook account to sign up for Spotify. But, as long as you don't mind that, the service offers some rather appealing assets. For example, if, like Stanbach, you enjoy sharing your musical finds with friends, Spotify allows users to send an album, or any personalized playlist one might concoct, to Facebook contacts. It's a bit like iTunes' "ping" function, only it's automatically hard-wired into your Facebook account. "Being able to just click on a song and then click on my Facebook friend list and hit share so that it will show up in their Spotify inbox is a nice feature," says Stanbach. "I can send an entire album directly to a friend's inbox and he can listen to it without having to go to another place to discover it. I don't have to send him a message that says 'link to this album.' It's just there on his computer in two seconds."

       So, what's the catch? And, how could it possibly be legal, not to mention profitable, for an internet site to offer streams of streams of entire albums at no cost? The answer lies in the clouds — that is, the not-so-new business model exemplified by websites that allow subscribers to stream music and even create and save personalized playlists that they don't technically own because the tracks aren't downloaded. These services – SoundCloud, Pandora, and Rhapsody are three of the more popular and successful ones – generate income either with ads that pop up from time to time, or through monthly fees that generate the revenue necessary both to sustain the site and to pay the artist and label royalties. In that sense, they're something of a hybrid between traditional radio stations and satellite newcomers like Sirius XM, only they offer every user the option of customizing a virtual playlist. And all the major internet players, from iTunes to Amazon to Google, are getting into the cloud game. Even MySpace, which looked to be headed for the dustbin of digital history, may be poised for a comeback, with Justin Timberlake on board as a major investor determined to move the outdated social networking site in the direction of the clouds.

       Going up against iTunes here in the States is a tall order for anyone, even Google. But Spotify has the advantage of already having established its dominance in Europe, where it has something in the neighborhood of 10 million users. Better yet, those users already appear to be buying into another aspect of Spotify that makes it both appealing and unique — a multi-tiered subscription option. Basically, Spotify is available as a free service. But, for just $4.99 a month, you can get all the music you want without any of those annoying ads. And if you upgrade to $9.99 a month, Spotify offers an app that allows streaming to any mobile device. In addition, like many of the other clouds competing for market share, Spotify sells MP3 downloads, just like iTunes. And, thanks to the clout the company already has in Europe, Spotify hasn't had much trouble getting American labels to hop on board.

       "I go on Pitchfork a lot," Stanbach explains, referring to the on-line music review site. "Even though I don't always trust their music criticism, they do make good recommendations. And albums that have just come out and are from bands I wouldn't think that Spotify would have in their catalog are on there. There are very few things I haven't been able to find."

       There are, however, a few artists who haven't been so quick to warm to Spotify, and whose music you won't find there. As "Digital News" reported last week, the Black Keys refused Spotify, as well as Rhapsody and Rdio, access to their new "El Camino." Coldplay and Mac Miller are two other artists who have said no to the clouds. And therein may lie the rub: if iTunes has downloads to offer that other sites can't stream, it could relegate Spotify to the secondary status that most of the other cloud-based services now occupy.

       "The problem with Spotify comes down to royalties," explains Walter McDonough, a Boston-based lawyer who is the general counsel and one of the founders of the Future of Music Coalition, a DC think tank that studies music and technology issues. McDonough, who's also on the board of the Sound Exchange, an organization that collects royalties from webcasts and satellite broadcasting, believes that artists, labels, and songwriters will grow increasingly disenchanted with Spotify and similar services because the revenue just isn't there. "It would take a substantial amount of activity with Spotify to equal the same types of royalties that you get from the sale of CDs," he explains. "It's not like I make a dollar over here, I make a dollar over there. It's more like, I make a dollar over here and I make ten cents over there. You'd have to have a lot of Spotify subscribers to make up that kind of difference. I just think that artists and labels are going to get to a point where it's really not in their interest to be part of this."

       It's hard to imagine on-line streaming going away any time soon. The cat, so to speak, is way, way out of the bag on that one. But that might not be the disaster that some labels and artists believe it to be. "I think services like Spotify might actually help the music industry," Stanbach muses. "I mean, you're never going to be able to stop certain people from trying to get music for free. People have been pirating music since they had tape recorders. It's just never going to go away. But, I think Spotify can help the music industry by presenting the music to people in a way that they're allowed to listen to it on their own terms and then they can decide what they want to purchase."

       The ultimate fate of Spotify and similar online services may come down to how willing people are to pay subscription fees. It's something Stanbach has already been pondering. "I was arguing with my friend the other day about that," he admits. "And I think that I would pay the five dollars a month to get rid of the ads. If I could afford it, I'd also pay more to get it on my phone and be able to listen to music off-line. One of the reasons is that I really want to make sure that Spotify is going to be around. If they get the financial support, I think that would help make sure they survive."
http://www2.the-burg.com/entertainment/2011/dec/13/spotify-streams-americas-digital-clouds-ar-1541753/