When Spotify launched its first beta in the fall of 2008, we branded it “an alternative to music piracy.”
With the option to stream millions of tracks supported by an occasional ad, or free of ads for a small subscription fee, Spotify appeared to be a serious competitor to music piracy.
In the years that followed Spotify conquered the hearts and minds of many music fans. Currently available in more than 60 countries, the service has amassed dozens of millions of users.
However, in recent months there have been calls to end Spotify’s free ad-supported service. Some prominent musicians and labels believe that killing the free tier will increase revenues.
This week it was revealed that Apple is also pressuring record labels to end the licensing agreements that allow Spotify’s ad-supported deal, presumably to make its own Beats service more competitive.
While Spotify hasn’t signaled that anything will change, killing the free version will be a dangerous move. In fact, it’ll be a step backward that is likely to increase piracy in the long run.
Sure, when free users are forced to pay it will motivate some to sign up for a paid subscription. This will then lead to more revenue in the short term, something labels and artists will appreciate. However, in the long run the effects may not be so positive.
One of the main appeals Spotify has for the public, specifically ‘pirates,’ is that there’s a free version available. Pirates like to try before they buy and Spotify free removes the giant hurdle to make the switch to a legal streaming service.
Those who then like the service and want the ad-free experience will eventually convert to a paid subscription. After all, paying is not a problem for most ‘pirates’ who tend to spend more money on entertainment than the average consumer.
Ultimately, the goal of the free version is to start changing the habits of pirates, and it’s been pretty successful at doing so.
Besides killing the free version of Spotify there’s also a possibility that it may become more limited. Just before the weekend news broke that Apple’s Beats may also offer some content for free, and perhaps they would like Spotify and others to do the same.
Again, this isn’t a particularly good idea. The magic of Spotify is that users can access a virtually unlimited library of music. A library that’s greater than what people can find on most pirate sites, and more convenient too.
Limiting the library for free users will make it look less attractive compared to the pirate alternatives. As a result, people will be less likely to get hooked and less likely to make the switch to becoming a paid user.
This brings us to the exclusivity issue. In recent years the music industry has excelled in making its music available to as many people as possible, often without restrictions. But now that some big artists are removing (or threatening to remove) their music from Spotify, or offer some content exclusively to other services, the overall appeal is waning.
Music fans don’t want to pay for 3, 5 or 10 services to get all the music they love. They want it all in one place. While this may not bring in as much as everyone would like, it’s a crucial part of stamping out music piracy.
A few months ago a movie industry report found that consumers in the UK need to use dozens of movie services if they want access to the most popular films. If the same happens to music, piracy will surely soar.
All in all it’s safe to conclude that exclusivity breeds pirates. So if artists and labels are in it for the long run they should keep everything together, and make it easy for pirates to go legal.