Music Business

Spotify Turns 10: Is It Friend Or Foe?

Spotify new[UPDATED] Spotify turns 10 years old this Sunday October 7th. On that day, T.I.'s "Whatever You Like" was the #1 song,  Metallica's "Death Magnetic" the #1 album and a Scandinavian startup had just launched a service that would change music and the music industry forever.  

Ten years later in the Fall of 2018, Spotify has 180 million users, including 86 million that pay to stream its 35 million track catalog in 65 regions across most of Europe, the Americas, Australia, New Zealand, South Africa and parts of Asia.  

Spotify has also radically upended how music is discovered, consumed and monetized.

For $9.99 a month, users get unlimited access to new releases and a growing 35 million track catalog. With just a few restrictions, users can even access Spotify at no cost, supported by advertising. Hundreds of millions more access music via its streaming competitors including Apple Music, Deezer, Tidal, Napster, Pandora and YouTube. 

Massive data and sophisticated algorithms now deliver undiscovered music – both new and old – based on a user's individual listening habits.   

But critics, including many songwriters and musicians, argue that the 50-53% of total income that Spotify pays to artists, labels and publishers is not enough. Others complain that being exclusively dependent on computer driven music discovery is bad for music. Charles Alexander of  label services firm Systemic, who is  in the trenches helping new artists gain traction, quotes Pandora's Rachel Whitney in pointing out that "there's no data for new art." 

"Deal With It"

Whatever side you're on, income from streaming, led by Spotify, now accounts for more than 70% of all recorded music revenue. 

So while the concerns of artists, labels and publishers are very real and music purists, audiophiles and hipsters will never be converts, Spotify is here to stay. And while he'll never actually say it on an earnings call, Spotify CEO Daniel Ek's message to the industry is pretty much, "Deal with it."   

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  1. What happened to the 70 / 30 split they started out with? And what about the 100 million who pay nothing for access to 40 million songs?
    And ultimately, what about the consolidation of listening portals and the death of local stations. What a disaster and total lack of the labels responsibility to the artists they supposedly represent?

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