Spotify is a Winner

Spotify has taken over the digital music era in a way no other music service has done before: providing users with unlimited streaming music from a music library with a size and scope similar to that of iTunes. Best of all, it’s free and legal to use this service, making it unlike any of its competitors because users can listen without engaging in music piracy.

For me, I feel like Spotify became popular in the U.S. in the fall of this past year. Originally, new users could join the site by invitation only, but Spotify worked with Facebook to allow anyone with a Facebook account to use the source by logging in with their Facebook email and password. Because of this, users who’d signed up through their Facebook accounts had whatever music they were listening to “published” on the Facebook Ticker feed:

If I were to mouse over the music note symbol, the window enlarges to show more details about the user’s Spotify use.

If I were to click the music note symbol, it would automatically load the Spotify application (if it were downloaded onto my computer) and start playing the song.

The application layout is fairly similar to other music applications like iTunes. Here is a screenshot of the login page when you first open the application:

As you can see on the left-hand side of the page, there is a list of sections within the application and subcategories of sections beneath:

MAIN SECTION

What’s New: displays the featured albums and Spotify Apps, new releases, and trending/top playlists among Spotify friends (those Facebook friends connected through the app)

People: displays a list of a user’s Facebook Friends connected on Spotify and if they use the service often enough, you can click on their name and a list of their public playlists and top tracks appear.

Inbox: All of the music sent to you from your friends can be found here

Play Queue: Shows what will be playing next on the app, or the “history” tab within this section shows what songs were recently played

Devices: A place for users to connect their iPhones, Androids, and iPods (with their subscription service) to take tracks with them on the go

APPS

App Finder: Shows different types of applications one can add to their Spotify experience, like a synced lyrics app, a Billboard Top Charts app that shows playlists based on the top hits, and an app that changes its playlists based on which mood you are feeling.

Top Lists: A list of top songs and albums for the United States, World, and through your personal listening history

Radio: A Pandora-like feature that develops playlists based on artists you select

COLLECTION

Library: A combination of both starred and “Local Files” music (see below)

Local Files: The mp3s already found on your computer (from an iTunes Music folder, perhaps? ;) )

Starred: Your already “bookmarked” music from the Spotify library

PLAYLISTS

Here is where you can create your own playlists for public or private listening, or add others’ playlists as a bookmark.

OTHER

Also notice there’s the album cover from the track currently playing on the bottom left like in iTunes, the music control buttons on the bottom of the application, and on the right side of the application, there is a “Favorites” area to add people whose music you’d like to closely follow, as well as a real-time feed of the songs everyone is listening to through the application (or if there hasn’t been any action for awhile, a list of friends’ last played songs through the app). If you were to click onto one of those songs, you could have the option to immediately play the song in the application.

Spotify touts that all of the artists and record labels get paid for every song play, but you may wonder how they are able to do that if most functions are freely available to anyone with the application downloaded onto their computer. This is where Chris Anderson’s freeconomics business models come into play, and Spotify definitely exemplifies the “freemium” and “advertising” models.

Under the freemium model, there is both a free and paid version of the services available, in that the paid version offers a significant advantage over the free model. Spotify uses this strategy, claiming that the premium version offers users the ability to ignore ads, listen to unlimited music (to be discussed later), use the playlists without being connected to the Internet (how they do this, I’m curious…), play music from a mobile device, and enhanced sound quality of 320 kbps (the same as typical CD quality). The service costs $9.99 per month, which for some may be an inexpensive way to vicariously “own” millions of tracks at once.

The “advertising” model simulates many other free services, especially in the internet freeconomics world where third-party companies pay the host company to offer banner ads, commercials, etc. to its users to compensate for users not paying for anything. Spotify has whole-heartedly embraced this strategy, as I have seen banner ads and heard radio-like ads for both music products and other commercial goods. Spotify has also used its advertising space to promote its own premium service and holiday playlists. With the audio ads in between songs, Spotify does not allow users to skip the ads, ensuring users listen to the ads and the third-party companies have gotten value from their media dollars.

Spotify has brought a new frontier and hope to those who wish to listen to music without engaging in piracy or having to pay. Spotify originally started in early 2009, and according to this article by TorrentFreak, “it took only three months before the number of Spotify users had outgrown the number of music pirates”. That is an incredible amount of new users. Additionally, the article said that “the numbers of people who download music illegally has decreased by more than 25 percent, and over the last year alone it dropped by 9 percent”. Since its US launch, in August, a month after the release, the All Things Digital Blog states that the streaming music service had “already signed up 1.4 million U.S. users for its free trial…has 175,000 paying U.S. subscribers…for a conversion rate — of 12.5 percent”. That’s a huge number compared to Chris Anderson’s typical 1% turnover from free into paying customers. It seems like Spotify’s initial positioning as “an alternative to music piracy” has served it very well as over the last few months music piracy has become a hot topic again.

As a Spotify user (who will likely never go premium), I find the service useful to listen and share music, see what others are listening to, and use it as a interim for songs that I want to own but haven’t bought yet, while still being able to listen to my own files in one application. The ads can be annoying at times, but I understand that it’s necessary to keep the business running.