by Keith Nelson, Jr.
Music streaming phenomena Spotify has transformed the desire for an all-inclusive music experience into an entity valued at $1 billion on the precipice of a revolution in music consumption. Spotify’s recent success and intuitive service is the result of early invitation beta testing, competition with other music streaming services, and a gradual global expansion, (remember, Spotify became available in the U.S. 2 and ½ years after it’s launch). With recent deals with Coca-Cola and Facebook, over 10 million active users, as well as Spotify co-founder Daniel EK projecting $889 million in revenue for 2012, Spotify is poised to become a juggernaut in the music streaming arena.
By sheer numbers, (over 15 million licensed songs are available), Spotify could realistically garner impressive usage even if it was simply offering basic streaming services. Spotify has consciously avoided that business model. When you click on “What is Spotify?” on the music giant’s homepage, the first phrase you see is “All the music, all the time.” Spotify’s free and premium accounts that give on-demand access to millions of licensed music from laptops, iPhones, iPads and Android smartphones fully realize Spotify’s lofty “all the time” claim, particualrly when one factors in that premium accounts can stream thousands of songs offline. The deep Facebook integration allows people to share music tastes with others by posting songs as statuses, further broadening the possibilities of new music discovery for millions and more to come.
The burgeoning app platform for Spotify is ripe with apps designed to deliver on Spotify’s mission to make music social. Spotify users can find playlists of songs found with the #nowplaying hastag attached on Twitter (Tweetvine), enter a chatroom of people listening to the same playlist (Soundrop) and even check if an artist they are playing is performing in their area soon (Songkick). Spotify’s Radio app is especially intriguing being that it delivers the same features as Pandora with the addition of unlimited skips for free users. Spotify and its Radio app are already showing an impact on the market with Pandora’s shares dropping to $8.75 after being $16 in June 2011 (around the time of Spotify’s U.S. launch).
In early 2010, Napster co-founder and music streaming demigod Sean Parker took a board position with Spotify after the Founder Fund, (the firm Parker is principal of), invested in the company. Since then, the ex-Facebook president has prophesized Spotify’s eventual dethroning of iTunes (2014 by his estimation) and there have been early believers. A growing collective of popular culture figures believe in Spotify’s potential by releasing brand-specific apps such as Def Jam Records, Pitchfork Media, and even President Barack Obama for his reelection campaign. The future is appearing sooner than expected with Swedish record label X5 attributing its Classify app’s streaming of the label’s “50 Greatest Pieces of Classical Music” with the album’s 50 percent spike in sales on iTunes. That begs the question: with record labels increasingly attempting to more directly interact with the buying public as well as already licensing millions of songs to Spotify, is a shift to selling music through the music service inevitable? Will Spotify become the Wal-Mart of music consumption? With Spotify recently releasing a Spotify Play Button for websites to embed a direct link to Spotify’s music library, Spotify will rise from here forward.
Keith Nelson Jr. is a music appreciator bordering on elitist trying to connect all the dots. He graduated from Syracuse University in 2010 with a B.A. in English & Textual Studies. Tweet at him at @JusAire.