Stream if ya wanna go faster – Spo­tify seeks to join up with Ap­ple

The Irish Times - Friday - The Ticket - - Opinion -

Pi­rate Bay is to go le­git. The no­to­ri­ous il­le­gal file shar­ing site has been bought out by a Swedish com­pany called Global Gam­ing Fac­tory for about ¤6 mil­lion. Which prob­a­bly means we’ll never hear of it again.

Mu­sic down­load sites such as Nap­ster or Kazaa that made the il­le­gal-to-le­gal move in­stantly lost their al­lure. Peo­ple, it seemed, just weren’t will­ing to pay for some­thing which they once got for free and, al­though Pi­rate Bay 2.0 is mak­ing lots of noises about “free con­tent”, the terms and con­di­tions will mean they’ll get your cash in the end.

While the buy­out is dra­mat­i­cally hailed as a fur­ther nail in the cof­fin of il­le­gal file shar­ing by the usual in­dus­try mouth­pieces, it is any­thing but. There are any num­ber of new Pi­rate Bay-style op­er­a­tions out there – all of which have learned from the mis­takes of their pre­de­ces­sors and con­tinue to re­fine their op­er­a­tions.

While it’s true that il­le­gal down­load­ing is on the de­cline, this is not the re­sult of fin­ing peo­ple or throw­ing them in prison. It’s all to do with the raft of new free (and le­gal) “stream­ing” sites now avail­able. A UK sur­vey re­cently found that among 14-to 18-year-olds (the age group that il­le­gally down­loads the most), only 26 per cent now do so com­pared with 42 per cent in 2008. And the fig­ures sug­gest that they’re all mov­ing to free stream­ing sites such as We7, Deezer and Spo­tify. You can get all the mu­sic you like on th­ese sites (ei­ther free or as a “pre­mium” sub­scriber); the one snag is you can’t down­load it.

The in­dus­try, how­ever, still has a big prob­lem with the “din­ner­party pi­rates” – peo­ple in their 30s and 40s who down­load il­le­gally sim­ply be­cause it’s more con­ve­nient than buy­ing it. Th­ese peo­ple aren’t nat­u­ral “pi­rates”, they sim­ply find the le­gal sites un­nec­es­sar­ily in­con­vienent to nav­i­gate around.

Th­ese ca­su­als can be eas­ily pushed to­wards the le­gal stream­ing sites. But if stream­ing is the new down­load­ing, then the big con­sid­er­a­tion here is which model will win out. At Spo­tify (whose founders Daniel Ek and Martin Lorent­zon have made the clear mar­ket leader by sign­ing deals with all the ma­jor la­bels), most of its mil­lions of users opt for the free as op­posed to the pre­mium ser­vice (those who go “free” have to lis­ten to ads ev­ery 20 min­utes or so). Spo­tify won’t dis­close how many pre­mium users it has, but is hop­ing to in­crease that fig­ure con­sid­er­ably with its iPhone ap­pli­ca­tion, which it is hop­ing to launch within the next few weeks – if Ap­ple de­cides to go along.

The Spo­tify iPhone ap­pli­ca­tion will only be avail­able to those pre­mium sub­scribers who pay ¤9.99 a month. In the­ory, sub­scribers won’t ever have to buy in­di­vid­ual down­loads from iTunes be­cause most ev­ery­thing will be on Spo­tify. They will also be able to lis­ten to mu­sic even when no in­ter­net con­nec­tion is avail­able.

Spo­tify cur­rently isn’t mak­ing enough money from ads to jus­tify its “free” sta­tus, which is why it’s push­ing users to­wards its sub­scrip­tion ser­vice. The site has added an­other two mil­lion songs to its cat­a­logue and signed a deal with Stephen Fry that will al­low users ac­cess to a num­ber of Fry’s au­dio­books for free, and es­ti­mates that the iPhone ap­pli­ca­tion will be suf­fi­ciently en­tic­ing to move a whole block of its free users to its pre­mium ser­vice.

But will Ap­ple bite? The com­pany is con­sid­er­ing the Spo­tify ap­pli­ca­tion and looking at how it will eat into its iTunes store. It is part of Ap­ple’s terms and con­di­tions that it can re­ject any ap­pli­ca­tion for “any rea­son they see fit”.

What comes down to is how much Ap­ple val­ues its iPhone sales over its iTunes rev­enues. The com­pany has al­ways said it makes lit­tle money out of iTunes, and the site ex­ists only to drive iPod sales. If Ap­ple al­lows the ap­pli­ca­tion, iPhone sales will in­crease be­cause Spo­tify’s pre­mium users not us­ing the phone will be sorely tempted to switch over to it. It may well be in Ap­ple’s in­ter­ests to al­low Spo­tify ac­cess – even if it means the slow death of iTunes.

Spo­tify’s Danny Ek and Martin Lorent­zon

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