Last night I went to a Digital Lounge event with Spotify's UK Sales Director Jon Mitchell. Spotify is a streaming music service which was founded in Sweden in 2006 and has attracted one million users. The free service is also available in Norway, Finland, the UK, France and Spain. It's premium service is available elsewhere for £9.99 per month.
According to Mitchell, Spotify offers a "legal alternative to piracy". In fact, Mitchell boldly stated that their only real competition is music pirates, although The Independent has stated that they have "declared war in iTunes".
Spotify launched in the UK in October 2008; the UK has quickly become their biggest market with 10,000 people per day signing up for a free account. Unlike many "next big things", they have found that people who download Spotify use the service on an ongoing basis, with average user sessions of 60 minutes.
As a Spotify user and huge fan, I can say that main attractions for me are:
- It's easy to set up and easy to use. The download is quick, especially as compared with the iTunes download which requires frequent updating and annoying prompts to download their preferred browser Safari. My view on new technology, as I've stated before on this blog, is that it must either be so simple that anyone can learn to do it, or so essential that everyone must learn to do it. Spotify is simple.
- I can add as many tracks as I want, without hogging massive memory on my computer. Plus, there's no chance I'll lose the files.
- People can easily share playlists on Spotify. With a few clicks via third party site ShareMyPlaylists, I added Rolling Stone's 500 greatest songs of all time.
- They have a great selection of music, having signed deals with all four major music labels.
- I don't have to deal with iPods, which are not built to last and contribute to electronic landfill.
- The service is "smart" enough to not serve ads while you are working on PowerPoint or other documents.
They are the first streaming service to strike deals with all the majors, which took a major shift in the labels' attitudes. Mitchell said their initial response when asked if they'd provide their music for free was "F--- Off". It took two-and-a-half years to get them to change their minds. Spotify has also signed deals with CD Baby and independent music aggregator Merlin.
Mitchell said the free model is not going away, as with some other services who are ending their free love. Instead, they will entice users to join their Premium service with unique offerings, such as access to U2's latest album one week before it was released. "We want users to have access to the free version so they can test it and see that it's easy to use and have the music they love," explained Mitchell.
Because of the ad-funded model for the free service, they "don't need 80% of their users to pay for the Premium service." However, Mitchell admitted that take-up of the Premium offering is currently low, but he expects it to improve as they educate people about upcoming features.
Mitchell didn't go into too much detail about their demographics, but he did reveal that 20% of their audience is 45+. They can target ads based on age, gender and post code. This makes advertising on Spotify much more 1-to-1 than on traditional radio.
What's next for Spotify?
- Spotify announced this morning that the service will be available on the Google Android mobile. [Watch their video announcement.] Expect more mobile phone partnerships.
- They are doing some deals with radio stations so they can recommend playlists (and share in revenue).
- Their web site states they are looking to work with "ISPs or mobile operators wanting to stand out in the crowd by adding a very comprehensive, legal all-you-can-eat music service to their current voice, TV and broadband services."
- Look for them to launch in other countries, with invite-only access or exclusively through tie-ups with telecomms companies.
I'll be interested to see what else develops. I think there are opportunities for brands to use Spotify in unique ways, perhaps through mashups. Their founder also started affilliate marketing company TradeDoubler, so he certainly knows how to work with brands. Mitchell said he "can't wait to see what happens when brands and bigger companies get involved." I guess as the sales director, he has more than one reason to be excited about that.
I don't know if I've ever written such a glowing blog post about one company. I hope someone from Spotify sends me a t-shirt.