STILL NOT CONVINCED ABOUT SPOTIFY? READ THIS.

Music industry pundit Bob Lefsetz was among the first public figures to extoll Spotify’s virtues; he’s been raving about the service for at least three years, ever since he got a beta invite to the European version and became hooked. I don’t always agree with the guy on everything, but when it comes to Spotify and the future of music with regards to streaming he’s always right on the money.

A huge number of MS readers expressed hesitation when Spotify officially launched in the U.S. last week, and many even flat out rejected the idea of a streaming service. Lefsetz recently published a point-by-point response to pretty much every angle of criticism Spotify is and will be facing, so rather than hammer the same old points I’ve been driving home at MetalSucks for the past year or so I figured I’d re-post Lefsetz’ breakdown. Comparisons to Pandora and Rhapsody, mobile access, streaming vs. piracy, Apple… it’s all there. Here we go:

THE DATA

SoundScan revolutionized the music business. It not only said what was sold, but where it was sold, allowing targeted marketing campaigns and tours. Spotify is SoundScan on steroids:

“Without Spotify, labels know only when an album is sold. If a CD is ripped for a friend or borrowed for a party, they know nothing. Spotify gives them a record, by location, age and gender, of every single time a track is played. Jay-Z used to think he was big in London, based on U.K. album sales; it turns out he’s big in Manchester.”Spotify’s Ek Wins Over Music Pirates With Labels’ Approval

I’ve lambasted the old acts for selling their new projects in the old way, using ancient broadcast media to reach so many who just don’t care. The key to selling in the future is knowing who your customers are. Streams will tell you what market to visit, where to grow from, what songs are popular…

Furthermore, the arc of a project will change. Now it’s all about front-loading, getting a big first week so the physical retailers that are left will reorder and media will cover your sensation. With Spotify the lifespan of music will be much longer. Furthermore, you can visualize what traction you’re getting and build from there:

“On Spotify, whenever an artist appears on a talk show or releases a single, plays of her entire catalog increase on Spotify, then plateau at a higher level. Albums follow a bell curve. Spotify is a ratchet, a step function. ‘LOP,’ Sundin says, ‘life of product, it used to be six months. Now it’s 10 years.’Spotify’s Ek Wins Over Music Pirates With Labels’ Approval

COMPARING SPOTIFY TO PANDORA

Is like comparing your music collection to radio.

You listened to radio for discovery. Once upon a time, radio was a club, you felt a member, now it’s just jive deejays and the hits of the day. You can get this information online, what the station is playing, and check it out yourself, instantly, on Spotify.

In other words, believing Pandora has got a chance against Spotify is believing that everybody’s going to sit at home and watch television in real time without a remote as opposed to employing their DVR, on demand, Hulu and other online options.

The future is about what I want now. And if anything, the window is only going to shrink. This is what the movie business doesn’t understand. We’re going to day and date home release, it’s just a matter of when, protecting windows is a waste of time, unless you’re employing a sunset philosophy, timing their extinction with the adoption of new viewing modalities.

As for music discovery, it’s primarily done through friends. This is where Spotify’s Facebook integration and playlist sharing comes in. We trust our friends and just about nobody else. Pandora is not our friend, it’s a for profit company making us expend effort to winnow a playlist that requires a ton of time to create. Huh?

SPOTIFY VERSUS RHAPSODY, MOG, RDIO, ETC.

It’s the interface.

Spotify does not operate in the browser, it’s its own special app. Therefore, functionality is much higher.

Also, Spotify looks like iTunes, you already know how to use it.

And Spotify mimics ownership. By employing P2P technology (legal, which is why those who wanted to kill it were so wrong), you can hear your track instantly. If you came to my house and I told you I owned all the tracks in Spotify, you’d believe me, functionality is just that high, there’s instant startup and the ability to fast forward and reverse.

SPOTIFY ADOPTION

Forget the surveys speaking of name recognition. If everybody knew about Rebecca Black in a week, why can’t they know about Spotify? The straight media is last on this, don’t believe it when it speaks to various analysts and gets a variety of opinions. Speak to a user, who will say Spotify is AWESOME! And it’s these users who are the marketing team for Spotify, they’re the ones who are going to grow the user base. This is how the modern world works. Focus on the product, not the marketing, fans will do all your marketing for you. Worked for Google, Facebook, Turntable.fm…

TRACK AVAILABILITY

Of course there are holes. But just like the Beatles came to iTunes, eventually everybody will be on Spotify. If you’re complaining about the holes, you’re still listening to CDs. Or you’re a thief and weren’t planning on paying anyway and we’re ignoring you.

MOBILE

2,000+ tracks live on the hand-held, playlists synch from the desktop application. So not only do you not need a cell signal, you incur no streaming costs. Of course you can stream what you don’t have in a playlist too.

PAYMENTS

Spotify pays more than Rhapsody. But I wish it were a percentage of Spotify’s revenue as opposed to payment per stream. And eventually the majors will try to scam the streams. But to complain about revenue is to live in the past. Streaming is here, argue for more from Spotify as opposed to the death of the service.

USER BENEFITS

This is what we’ve been waiting for, everything at your fingertips at one low price. This is user nirvana.

PIRACY

It doesn’t pay to steal if you’ve got what you want at your fingertips. And stealing on a mobile is an insane experience. Why not pay a low price to save time? In other words, do you want to use a dial phone or a touch tone?
ACT BENEFITS

The barrier to entry to hearing your music just disappeared. You no longer have to focus on distribution, just music and marketing. And the best marketing is good music.

INDUSTRY BENEFITS

More people listening to more music results in more people wanting to go to the show and buy merch. MTV created a world of few winners and endless losers. The universe is much bigger now, and that’s to everyone’s advantage except for the old fat cats overpaying to get themselves heard and keep you out.

APPLE

It makes very little on music but if it doesn’t have a streaming application in the wings, it’s stupid. Ownership will survive, just like vinyl records, but it will become an ever-decreasing piece of the pie.

COMPETITORS

Usually only one site wins online. It’s not like the brick and mortar world where one store is far away from another and prices vary. The best wins. There’s one iTunes, one Amazon, despite billions spent by Bing, Google still dominates. Facebook killed MySpace and there will be Spotify and a bunch of also-rans. Then again, just like Google+ is scaring the bejesus out of Facebook, Spotify is not forever. We live in an evolving world, and if you don’t keep improving, you’re history.

HOW THIS HAPPENED

1. Spotify started small in a country deemed almost irrelevant to the music business, Sweden, riddled with piracy. iTunes did the same thing, starting in the small at the time Mac universe.

2. Users testified.

3. Public opinion was against the naysayers. It was hard for Warner, the last holdout, to stay out with the deafening cry from within the community.

4. Facebook. Once Spotify aligned with the social network giant it gained a sense of inevitability. The music business is afraid of Facebook, they see it as an indomitable juggernaut.
WINNING

We always knew someone was going to win in the music delivery sphere online, it was just a matter of who and when. A lot of money was wasted on the way, but there was always going to be an inevitable victor. Too bad the music industry didn’t push the future instead of holding back, maybe all those people wouldn’t have had to lose their jobs.

PAYING

Forget that Spotify is free on the desktop. The iPad has put a dent in PC sales, it killed the netbook, it’s all about wireless and hand-held. There’s no free option for mobile. To think people won’t pay is to believe they’re going to stop texting.

DRUGS

That’s what music is, a drug. That’s what Spotify is. And the way you get people hooked is to give them a taste for free.

SHORT TERM

Ignore the numbers, which will be significant. Online it’s all about tipping points. No one has a computer, then everybody gets one to play on AOL. Then people suddenly start burning CDs. Then they sign up for broadband to steal music and watch YouTube clips. The streaming train has left the station. One day, everybody will do it. It’s not tomorrow, but it’s not as far away as you think, and it is inevitable. Ownership will survive, but rental will be king. And the music industry should take a tip from the Republicans, it’s all about the moniker. Don’t call it rental, call it ACCESS!

FUTURE OPPORTUNITIES

He who tells us what to listen to will make a ton of money. And it won’t be done by computer, only people can choose what’s worth listening to.

MONEY

Spotify is geared to make a ton. I’m not gonna get a cent.

CONCLUSION

It’s over. The majors lost. The users won. Play to the users. Build a fanbase. There’s a ton of money to be made. It’s easier than ever to reach everybody but harder than ever to get people to pay attention and stay focused on you. That’s your challenge. Daniel Ek is an engineer, a businessman. You’re an artist. It all depends on you.

CONCLUSION 2

Don’t be a cheapskate. If you can’t score an invite, sign up for five bucks. It’s all about early adoption, being able to speak intelligently about what’s happening now. You can always cancel after a month. Or you can pay for Spotify on your iPhone and be the envy of your friends…for a month or two.

So… convinced yet? Sign up here. You will not regret it, I promise.

-VN