Streaming service aims to move users to an access model
While the waiting is over, the hard work may just be beginning for Spotify in the U.S.
The European streaming service, which launched Stateside to great fanfare earlier this month, has long been positioned to be a revelatory new player in the American music business. That revelation started to seem more like a tease when negotiations with the four major label groups dragged on, with some predicting the service would never make it to these shores without major overhauls.
But now, the labels all jumped onboard (along with performing rights orgs ASCAP and BMI) — and at least one seems to be welcoming it with open arms. Just Wednesday, Universal Music Group launched Digster, a service providing playlists assembled by UMG execs and artists, streaming through Spotify — an important, if tacit, endorsement from the industry leader.
Ken Parks, Spotify’s chief content officer and managing director of U.S. operations, first established the company’s American offices nearly a year ago. “The process was not quick, that’s fair to say,” he said. “I haven’t really thought about it, and maybe I don’t want to think about it.”
Early reviews of the service are overwhelmingly positive, and the company claims that 70,000 users have opted for its two paid service tiers since the U.S. launch. Acclaim has not been universal, with complaints raised over everything from device compatibility to radio functions and classical music options, but these are mere details in the face of one big question. ITunes may have weaned listeners away from the need to own physical copies of their music, but breaking the need for ownership entirely, and moving users to an access model, is a tougher hurdle.
“It happens in some sense organically,” Parks noted. “There really isn’t anyone who discovers music on YouTube that thinks about not owning that stream that they just listened to.” In that sense, users can “engage with Spotify without really having to change that behavior. They can build collections, build playlists, etc., and the user views that as their collection. And it’s theirs every bit as much, because it’s always there.”
Spotify’s free tier may represent the best opportunity yet to get listeners hooked on the new model, but it comes with challenges of its own. Advertising supports the free model, but ushering users into the paid tiers could be crucial for the company’s profitability. And as Spotify tries to parlay the wide exposure provided by its free tier into paid subscriptions, its competitors may be rushing the other way, taking advantage of the labels’ newfound pliancy to beef up their own entry points. Streaming site MOG had previously offered a two-week free trial of its service, though CEO David Hyman told Variety that Spotify’s launch opened the door for the company to provide “a more robust free offering.” And Wednesday Rdio revealed that it would soon be unveiling an “Unlimited Family” plan offering a discounted group rate.
Parks said he’s aware that Spotify has no claim to novelty but places his confidence in the product. “There are subscription services that have been here for many years, so you might say there’s some awareness of subscription services here that there wasn’t in Europe, which would benefit a company like Spotify. But you could certainly look at the glass as half-empty as well and say that those services really haven’t penetrated in a mass way, so we’re starting from scratch in this market as well.”
But competition and questions over its business model haven’t deterred the company from trying to become just as influential as it’s been tipped to be. As Parks said, simply: “Our aim is ubiquity.”