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Music spies a Spotify sunrise

Rory Cellan-Jones | 13:04 UK time, Thursday, 21 January 2010

Some of the key figures in the music and video industries' battle against web piracy gathered this morning to issue a couple more dire warnings about the threat posed to artists and culture by file-sharing. The occasion was the publication of the IFPI's digital music report - and we were told that piracy was, among other things, destroying the musical culture of Spain and threatening the livelihood of hundreds of technicians who work on TV programmes like Spooks.

Spotify logoBut one word kept cropping up in the conversation as a beacon of hope for the music industry - Spotify. Now, until recently, music industry insiders, while enthusiastic about the "freemium" music service launched a year or so back by the Swedish entrepreneur Daniel Ek, were cynical about its commercial prospects. Some went as far as to suggest that it might not survive through 2010.

But at this morning's press conference, one of the biggest noises in digital music, Rob Wells of Universal, had a very different message - Spotify was well on the way to proving its commercial viability.

"Spotify is a very sustainable financial model - full stop," he said firmly. And he explained that making the business add up involved converting just 10% of their users into paying customers - and they have apparently achieved that in all but two countries. That means that Spotify can now pay the music industry in those countries with a share of the proceeds from subscriptions and advertising, rather than on a ruinous per-track basis.

The two countries where it hasn't reached that threshold are the UK and Spain. In the UK at least, it appears Spotify has been a victim of its own success, attracting so many "customers" eager to use the free ad-supported service that it's had to deter new arrivals by making it invitation only.

Rob Wells says Spotify now has 250,000 subscribers around the world and in 12 months has become the fourth-biggest revenue generator among Universal's partners. Mind you, a bit of quick mental arithmetic tells me that those subscriber numbers only add up to revenues of around £30m a year - which may not yet be enough to warrant mass jubilation amongst music industry executives.

It's also worth noting that Universal has a stake in Spotify, so it's in Mr Wells interest to talk up the business - but he insists that Daniel Ek's team is cracking the freemium conundrum: "These guys are very good at what they do," he said.

One place where Spotify isn't doing so well is Oxford University, which has banned students from using the service because it relies on peer-to-peer technology. John Kennedy of the IFPI said he would go to the university authorities and ask them to lift the ban. Of course, the irony is that the music industry has been encouraging universities to block peer-to-peer, because illegal file-sharing has been rampant on campuses.

My sources tell me that plenty of Oxford students are still using Spotify in Oxford. Then again, maybe Daniel Ek would be happy to see them blocked - they're unlikely to be among those that upgrade to the premium service, so too many of them listening for nothing could actually delay his company's progress towards profitability.

Comments

  • Comment number 1.

    1. Spotify won't fully realise their potential unless they move to the US market.
    2. Oxford Uni isn't the only institution in the UK that puts restrictions on P2P software. Also, because Oxford is just a collection of colleges (each independent from each other) you will find some colleges ban it and some won't, which is why you've had reports of students still using it.

  • Comment number 2.

    It was from reading this Blog a few months back that I first heard of Spotify. At the time it was not by invitation only, and I began using it.

    This month I paid my £9.99 for a month to have the premium service, and having an iPhone means my playlists follow me. What it has brought to me is an 'eat as much as you like' service, which means I am finding more music and artists than ever would have previously had I had to pay for an individual track only to find I did not actually like it, but had it now regardless.

    I've never really got into downloading music for free, not because of some moral thinking and wanting to support the industry, but because I did not like the wait, the fact what I got might not be the full track and would have to go searching again. But as long as Spotify is around I am increasinlgy listening only to it, not to my large locally stored music collection.

    I do think - especially as they are new to the scene, the premium service should begin at £5.00 a month. I am sure would attract many more at that price, and thus with those added customers help pay back the fees it must pay to the labels.

  • Comment number 3.

    @nenslo Oxford is not 'just' a collection of colleges, and many facilities, including the network, are centralised. All p2p software is banned (though not necessarily blocked) from the university network, so anyone using Spotify at any college or department is breaking the rules. This is not something the colleges get to decide, unless they want to get themselves an independent network connection.

  • Comment number 4.

    I have got to say, that Spotify is my favourite application on the web. At the moment I am a free user, but I now have a phone that is capable of accessing spotify so I am goint to cough up the tenner a month to get a premium membership. It's not just about the music, but the interface is one of the best I have come across and the biography and ability to link to similar artists is fantastic. Well done to them for finding a fremium model that may actually work. If the music industry had been a bit more forward thinking ten years ago they could have come up with solutions to their piracy problems a long long time ago. The idea of stopping people from downloading is never going to work. I am late 30's but the generation beneath me have no concept of paying for web based material and probably never will. You have to be a able to offer content and a service that people are prepared to pay for. I am still waiting to see how the newspaper industry are going to surmount this challenge. I don't think they will to be honest. Anyway, big thumbs up to spotify.

  • Comment number 5.

    'Then again, maybe Daniel Ek would be happy to see them blocked - they're unlikely to be among those that upgrade to the premium service, so too many of them listening for nothing could actually delay his company's progress towards profitability.'

    But surely, even if they're students, they're still listening to adverts and generating a little bit of revenue that way?

    Yes, students are generally a prime candidate for piracy, they aren't all free-loaders or stupid, especially when they know bypassing the stuff that makes a service stay free could remove it from them altogether.

  • Comment number 6.

    The worst thing about the music industry stance on music "piracy" is its towering hypocrisy.

    It's always trying to make a "moral" case and yet it has consistently acted in an amoral (and occasionally immoral) way since its own conception. This "cultural desert" nonsense being yet another bizarre and disingenuous example.

    All it has ever and will ever care about is the £££'s. Anything else is irrelevant, if they can make enough money out of "free" music sharing then suddenly it will all be fine and all the emotive language and "moral" grandstanding will suddenly disappear.

    Of course historically and currently the music industry has tried to put the genie back in the lamp with utterly draconian copyright legislation, rather than embrace change and realise that actually they can probably make more money than they ever did in a new way.

  • Comment number 7.

    This "cultural desert" nonsense being yet another bizarre and disingenuous example.

    Indeed; as neatly illustrated by this BBC story from less than three weeks ago, 'Singles sales soar to record high': http://news.bbc.co.uk/1/hi/entertainment/8439963.stm

    What you've got to ask yourself, is how many of those sales can about in whole or in part because someone had heard some of the music for free, possibly with the help of those evil cut-throat pirates. If the music industry were to be believed on this issue then they'd already be dead - home taping killed them in the eighties.

  • Comment number 8.

    You know honestly, this is all hogwash. I am a mid 30's educated male with disposable income. I have money to spend and do not mind spending it for something I want and will use. I have tons if old plastic cassettes, and then just as many stacks of CD's. However, with Sony installing root kits on the computers of anyone that just inserted a music cd into their computer, they are the ones that started punishing legitimate users. Then the RIAA whines incessantly that sales are down. When you punish your customers then they will go elsewhere. The other thing is a lot of music is pop crap. Year ago there was pop crap but a wide diverse collection of other music, that wide diverse collection has gone elsewhere and so has the customers. The RIAA is suing people left and right and well, honestly it kind of scares me that if I have any of their music, use it in any way they don't like that they will come and sue me as well and thats how I feel as a customer. You hear reports of them suing people now for hosting a party and playing a CD in thier own house for friends. Since this is not a commercial license. So again I take my business elsewhere. I still buy a couple CD's a month not as much as I used to because I have to research a CD and make sure it is not an RIAA cd. There are several sites that sell music from new artists and they are not associated with the RIAA, even amazon.com has local artists and non RIAA artists. Sony complains their profits are down and all I can say is good. I do not forgive them for installing root kits on my computer. I bought my music legally, and they punished me for it for buying it. I no longer buy Sony anything, I don't support companies coming back and prosecuting or punishing their customers. I really hope to see the RIAA go down broke and penniless. They are extortionist in my view. The fact they are now trying to get involved in my Internet connection even though I am not even doing any illegal downloading is insulting and no different that Sony installing a root kit on my computer. They have no right to get their noses involved in my web surfing.

  • Comment number 9.

    Has anyone else noticed how "30 seconds of adverts every 20 minutes" at the beginning has steadily become "about a minute of adverts every couple of songs"?

    I signed up to the service when it first arrived on the scene and upgraded to premium when I had an iPhone which made the £10 much more worthwhile. I now use it basically as a tool to screen new music before purchasing a CD (nothing will ever really replace the quality of the physical product in my opinion). For this I find it very useful but I think the adverts are becoming way too intrusive.

    There's only so much you can take of listening to the same advert over and over in an hour!

  • Comment number 10.

    It's nothing to do with the IFPI what Oxford allows to happen on its networks - if it's a P2P application, it's not allowed. Even the old BBC iPlayer was banned. If the University makes an exception for non-academic reasons, then it gets into the realms of making value judgements on the worth of each application.

  • Comment number 11.

    I was discussing the concept of a potential cloud based iPod on Twitter the other day and Spotify came up as a service ideal for this type of tech (of course, it's already available on iPod). The obvious sticking point for this, which I think is also why Spotify does not have as many premium subscribers, is that we need much better network/wifi coverage for it to be a valid portable solution. I think that Amazon, with it's always on 3G Kindle could be setting the bar high for portable technology like this. Maybe Apple should take note?

  • Comment number 12.

    But how much is this really a "beacon of hope" rather than grudgingly take the money that's being offered? The music industry failed to open new distribution channels ten years ago (or even 15). Fighting a losing battle against pirates, of course it's taking money from models like Spotify. But would that be its first choice? I don't think so.

    Being a "creator of content" myself, I do see livelihoods of artists and writers threatened by rampant piracy and a complete absence of understanding of the free-loader generation that content creators would like to make a few pounds from their work, too. Musicians at least can sell t-shirts and concert tickets... but writers are way, way worse off, and that's the next big topic.

  • Comment number 13.

    It's sad that the IFPI has been controlling music for so long they don't even understand what culture is.

    The idea that culture is simply "music that is paid for" is ludicrous. Even if the whole of Spain is downloading music, they've not lost their culture, they just don't believe the culture they're being sold is worth paying for.

    Culture exists regardless of business, it's not something that can just dissapear piracy or no piracy. Culture can however be manipulated by companies sharing effective monopoly status and that's really the situation with the music cartel- what they're really saying is not that Spanish culture is dying, but that their grip on Spanish culture is dying.

    If anything this tells an interesting tale- piracy actually seems to be allowing a nation to take back control of it's culture, rather than have an artificial culture indoctrinated into it by large corporations. In this respect, what's happening actually sounds like quite a positive change. The idea of a country being able to evolve it's own culture again without external pressures rather than being fed the likes of Britney Spears, McDonalds and Coca-Cola is surely a good thing.

  • Comment number 14.

    Spotify is a joy, especially if you stump up the monthly tenner to turn off the ultra-annoying adverts. Its immediacy encourages musical exploration like no other application I have used. Indeed, I now have an uncontrollable Shakira habit that I feel compelled to share: http://open.spotify.com/album/3Sm7gA9q1Cv14i8ZNjgdsh

    The only complaint I have is that the iPhone app needs some work on its user interface, and Apple need to find some way of allowing it to run in the background, as it gives its own system, which does, an unfair advantage.

    The music industry is finally waking up to the new economic realities of the web. Perhaps now they'll start to see it as an opportunity rather than a threat, and they'll stop lobbying for oppressive legislation to preserve the obsolete status quo.

    Right, back to my Colombian songstrel...

    http://www.concentrichron.com

  • Comment number 15.

    As someone who enjoys folk music, I've a feeling that their idea of a cultural desert could be culturally richer to me.

    I'd love to think that with their version, instead of having market driven music, it might in some cases lead to more taking up singing, taking up musical instruments, entertaining themselves and I'd hope investigating the wealth of traditional material.

  • Comment number 16.

    Why would people want to pay for a product that is fundamentally rubbish?
    Music is awful these days - absolutely awful. It's not even about music anymore, but celebrity - Lady Gaga? Cheryl Cole? JLS? Please.

    Music sales have gone the way they absolutely deserve to go - down the pan, with real artists able to make a very good living from live performances which people are perfectly willing to pay for, while the Robbie Williamses (with their comedy £80m cheques) disappear down the hole they've created for themselves.

    And as for movies - a much more important sector as it still has entertainment of the masses at its heart - well, a fundamental shift needs to occur away from uncomfortable cinemas full of unruly kids and hideously overpriced hotdogs and on to the net, where it is perfectly possible to download a high-quality, DRM-loaded if necessary, movie even at relatively low bandwith rates in the home for the same price of a cinema ticket; start your download in the morning, go to work, come home and there it is. If you can download a cam copy that's taken a week to appear on P2P in a day then you can download a good, perfectly watchable legal alternative the day it comes out at the cinema.

    There is obviously a market for watching new movies at home, on good quality large TVs which the majority now have, otherwise there wouldn't be such a massive market for poor quality, video camera recordings of the latest releases. The simple fact is that the greed of the majors won't countenance the move.

    It is to their detriment that they are doing nothing to make such a move.

  • Comment number 17.

    Choice, essentially. Give people a choice and they'll pay for it.

    We are too canny these days, and these people don't realise it.

    Well wake up, or go out of business.

  • Comment number 18.

    The trouble with this blogger, as with so many across the entire BBC network, is that they're so in the thrall of the exact same execs who are destroying the industries that they claim to care about, and this blogger claims to know about - whilst knowing so very, very little - that not only does the average BBC website viewer/contributor receive an awful lot less than the information they are entitled to expect considering the amount of money they are forced to pay for the service (unless you're from outside the UK, in which case you should be barred from all rights to this site unless you pay for it, quite frankly), but they are also, unwittingly so in the vast amount of cases purely due to the lack of unbiased information given on, certainly this particular part of the site, practically sold products and services which are completely the opposite to what they either want or need - this blogger's almost onanistic fascination with Apple being a prime example.

  • Comment number 19.

    "Drastic action needs to be taken in order to save the Spanish music industry."

    Heh, from who? To this day musicians need to be liberated from a music industry that fleeces the artist to make it's money, then complain about piracy when it's not getting enough.

    When will the music industry give musicians the rights to their music, like in the book world?

    The drastic action is already being taken; musicians have had enough of the record industry and releasing their music online.

  • Comment number 20.

    Apologies for that hideously long sentence.

  • Comment number 21.

    Listen to BBC Radio One - the most influential radio station in the UK - and the Chris Moyles and Fearne Cotton shows in particular, if you need any convincing whatsoever that what I wrote in the first two paragraphs of post #16 isn't absolutely true.

  • Comment number 22.

    So let's knock this hand-wringing for your freebie-givers on the head, eh? And try looking at the bigger picture.

  • Comment number 23.

    I see.

    Yet another BBC blogger who, when found out, goes into hiding.

    Ladies and gentlemen, I give you....


    Another phoney.

  • Comment number 24.

    Glad I'm at Cambridge and can use it...

    I did use spotify free for about 6 months before decided I had an ipod touch, I listen to it and have got rid of my itunes (I ran out of space on my macbook) and its great, apart from a couple things it needs to change if I think it were to survive.

    1. It needs to be compatible with my own tracks, as not every track is there and some of my playlists are missing crucial songs.

    2. It doesn't work if I use the college wifi because of the type of connection (indeed this happens on the university network and in many offices), edurom is configured for ipod but I haven't yet been able to see if that extends to spotify, but if I want to change my playlists I have to bike into town and use free wifi from a pub.

    but all in all I'm happy to pay a tenner a month - I have a fleeting tendency so it saves me from buying loads of cds I'll listen to once then move onto the next sound



  • Comment number 25.

    The Pirate Bay, £0.00 a month, unlimited downloads and no adverts and the music i want, in a format of I want. DRM free so I can play on whatever device I want.

    Why pay more?

    I also happen to agree 100% with post #16, let the music "industry" die, after all, they're not the ones who make the music are they? Many many years ago, before they came along, was there music? Why yes there was. When they vanish off the face of the earth, will there be music? Again, yes there will. It's in one's soul, not wallet.

    Too many "get rich quick" "artists" these days and not enough quality. Quantity over quality certainly seems to be the motto of Sony/BMG/Whatever.

    Besides, who, when buying a track actually cares which record label it is on?

  • Comment number 26.

    @16

    Later this year TVs will connect direct to the net.
    That will make hiring movies much easier and the quality
    will be HD. You Tube are postioning themselves to be ready for that
    'new' market. They are involved with the Sundance Film Festival and they are
    about to start streaming live cricket matches.

    Indie film makers will find it easier to get their own films out there. So
    the choice will increaese.

    ----------

    As someone who works in digital film and music business it annoys me that some think it should all be free. They don't work for nothing so why should musicians and writers

    Spotify are moving into China. That is a big move for them and a wise one.
    What no one wil confirm or deny is that the labels have invested in Spotify.
    It would be a smart move. Many in the business (USA and EU) think they are the first site to come up with a model that works.

    Though I am old enough to remember that at one time the labels wanted to place audio adverts in the 'spaces' between tracks on Vinyl LPs. It never took off because there was an argument as to who owned the copyright for that 'space' - the bands or the labels.


    I am creating an indi label. We are also looking to China. So obviously the copyright laws are important for me. The Chinese are threatening to clean up their act on piracy.

    The guy who was found not guilty (in the UK)last week could have run his club as a legit business. He would have made a good living from his
    £200,000 turnover. It looks like the BPI will have another pop at him.

    Quality: A few sites are beginning to offer FLAC files (audio is compressed in FLAC without any loss in quality) therefore producing a better sound dynamic. I think you will find more of that model/option taking off.

    Unfortunately for the music business some people think all bands
    are making the same as Oasis or Coldplay. Most are not.

    Re: Robbie Williams and his £80m cheque - that was not his money to do what he wanted with it. Record labels are banks. The advances they give out are only loans in most cases.

    The bands then pay for studio time, Art work, videos out of their advance.

    Also if we should finish up with companies like HMV closing down I hope the
    pirates will be pleased about all the pople they have put out of work.

    _____________
    __________________

  • Comment number 27.

    I should have said that the labels did not help their cause by overcharging
    for their back catalogues.

    The Beatles albums I had bought in the 60s for £1.50 suddenly cost me £18.00 on CD. It was a rip off. They had not had to re-record the albums just invent a new way to package them.

  • Comment number 28.

    #26 - if HMV closes down, it won't just be because of piracy; lol, they'll shut because people are moving to the net, legally or otherwise.

    Ok, let me talk about a few other things that annoy me ...
    1. they're saying tv-series downloading is killing tv. WHAT?! I didn't realise that we paid per episode, i thought the channels bought them and showed them, after all, it's a blanket BROADCAST, doesn't matter if someone's at the other end "listening", it's out there anyway. we all pay TV tax so what's the problem with me downloading Horizon for example? PLUS, why are shows out a week or so in the US compared to over here? Hardly promotes people watching live tv does it? Not to mention all the commericials. I wouldn't buy a tv show on DVD, what's the point? Seen it once, seen it - no point watching it again and again. Plus, they make it illegal to rip to play on an ipod or whatever, cheers guys. And they wonder why people download.

    2. music - as said before, there will ALWAYS be music, it's in the heart, soul and mind of mankind, just because artists might have to do a "day job" to pay the bills, I won't be upset if HMV closes or if record labels go bust.

    3. movies, wow, piracy certainly stopped avatar making those BILLIONS in the time it's been released to now didn't it. With CGI spoiling all the films out these days, no big loss. If H'wood vanished tomorrow, I wouldn't really care. A small budget film can often be more entertaining and enthralling than a multi-million pound flick.

    "Tv connected to the net", ok, not really a big thing, I've had a PC connected to my TV for about 10 years now, same kind of thing except for one thing, I AM IN TOTAL CONTROL OF EVERYTHING, the OS, what programs I can use, it integrates with my LAN and so on. I'd rather not have a TV manuf'r dictate to me what I can do online thank you.

    Anyway, in summary, TV is dead, stop flogging it and embrace change - the future is the net, like it or not, if that means certain companies go bust well, life goes on, things change, things evolve and things become extinct. It's happened for 4.5 billion years and is set to continue another 4.5 bn years before the sun explodes, wiping the planet out of the universe.

  • Comment number 29.

    #26/27,

    I am not arguing whatsoever for anything to be free. I am arguing that the quality of what's forced down people's necks is so low that it is a crime to expect people to pay for it.

    Many people lose their jobs when technology advances - that is the way of things, unfortunately. The digital industry seems to be the only one which thinks it has a divine right to be exempt from this.

    It is not.

    Frankly, if people are stupid enough to re-buy 40 year-old albums over and over again, that is their perogative - I find it idiotic in the extreme and so do the majority of people, by the looks of things.

    The music industry is dead in its current form - you know it, I know it, and about time too, as we are all being conned by a mixture of shocking product, crass celebrity and a bleating corporate entity that should be put to death.

    And I don't remember Robbie Williams saying anything about paying anyone out of his £80m cheque - only, in his words, "I'm rich! Rich beyond my wildest dreams!" I think you want to check your facts.

    I will reiterate - people will pay for quality. People will pay, for example, for streamed movies on the day of release and that the movie industry cannot see this, when the evidence of millions upon millions of bootleg camcorder copies doing the rounds in schoolyards, pubs and workplaces for £3-4 each is right under their noses for ALL to see just proves the remarkable stupidity of these people.

  • Comment number 30.

    HMV are on the net. You can download from their site.

    The TVs which are net ready are not coming
    'bundled'. You can watch anything you want.

  • Comment number 31.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 32.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 33.

    I'm more concerned about my kids using Spotify which seems to gulping through our monthly 10GB of broadband at a rate of knots!

  • Comment number 34.

    There is, of course, much shoulder shrugging, disbelief and, lets be honest "schadenfreude" about the music industry's oft repeated dire warnings. Particularly as they themselves are largely to blame for the predicament they are in. I'm sure if they could, they'd possibly reconsider the long term consequences of two things. Their efforts to criminalise internet retailers for selling cheaper imported CDs, and attempting to block people from making mp3 copies of the CDs they owned. Just think, if they'd let people buy cheap CDs, and allowed them to transfer tracks across to their mp3 players (without fear of root kits, DRM or ultimately prison) where the music industry would be now? I suspect they pinning their hopes for salvation on a service like Spotify.

  • Comment number 35.

    Doh. There should be a "not" in that last sentence. As in "they'd not be pinning their hopes for salvation on a service like Spotify."

  • Comment number 36.

    @8 - Well said sir!

    The music industry is in a mess - it's losing revenue because it is in the main producing garbage. The execs have been convinced (or have convinced themselves) that everyone who downloads something illegally would have otherwise bought it - total rubbish. They are losing nowehere near as much as they say they are from illegal filesharing, it is just that they are mightily embarrased that they got it wrong and missed the boat with the internet. For goodness sake they have even convinced our government that this is the next biggest crime to treason and got them to invent the Internet Police with the digital rights bill.

    I don't know if services like Spotify will be the way forward, some of my friends think so (I am a 40 year old IT developer and not a teenager though). Personally it is not for me - I like having my music on my machine (backed up several times, which is probably a hanging offence now). I like albums - they seem to have a better flow to them than just listening to random tracks. I don't buy CDs anymore, but I do buy and download lots of DRM free music (refused to use iTunes until they stripped it off) - I copy it off somewhere immediately in case the government suddenly introduce forced retrospective DRM on us in the future.

    I am happy to pay for my music by the album as long as I am not forced into some draconian way of doing so or forced to listen to some advert ridden pseudo radio station instead.

  • Comment number 37.

    @32 - Ah, but he does have a good heart - and that's hard to find these days.

  • Comment number 38.

    Tin-eared, graph-paper brained accountants
    Instead of music fans
    Call all the shots at giant record companies now
    The lowest common denominator rules

    Forget honesty, Forget creativity
    The dumbest buy the mostest,
    That's the name of the game

    But sales are slumping, And no one will say why
    Could it be they put out one too many lousy records?!?

    - Jello Biafra, 1985.


    Yes, 1985. These industry dinosaurs are taking a long time to die.

  • Comment number 39.


    All we ever seem to get from the BBC on this issue is the Music/Movie Industry view. More often than not, it's just a case of pushing the viewpoint from the latest industry press release.

    Why do the BBC never present any alternative views? There is a side to this whole copyright argument that never seems to be aired.

    Copyright is supposed to be a deal with society. We allow a monopoly on a creative work in exchange for that work becoming public domain after a reasonable time. Both the monopoly, and crucially, its limited duration, encourage the production of new works.

    Unfortunately we have a situation where large corporations have managed to strong-arm governments (or persuade venal politicians) into endlessly extending copyrights, thus preventing works from ever entering the public domain. This results in a situation where a huge chunk of our very culture is forever locked down and untouchable. This cannot be right.

    When it comes to copyright, it is effectively big industry on one side and the public on the other side. As is usually the case, the public interest is swept aside in favour of big business. That's why copyrights have been so massively extended over the years. However, what happens when one side of the equation is not so weak and helpless? What happens when its big business vs big business?

    Interestingly this is exactly the situation when it comes to patents. Patents tend to have much shorter periods than copyrights. Large corporations could have done the same thing as with copyright, i.e. bribe and bully governments into endlessly extending patents. However, they have not done this because it would not benefit them in the long term. If companies couldn't even use 50 year old ideas in their products without paying for the licensing, it would be a financial disaster for them.

    Not being able to use a 50 year old idea in a product (without paying for it) may be a disaster for big business, but similarly, not being able to play a 50 year old song for free is a cultural disaster for society. The cultural disaster of endless copyrights is not just about consumption though. It also prevents the creation of new works using those copyrighted works (just look at youtube and see how 40 and 50 year old songs are being removed from innovative videos).

    Copyrights need to be cut back to their original terms. We should be having copyright reduction acts, not copyright extension acts.

    While these large record companies are bleating about piracy, they are simultaneously fleecing the very artists who create the works. If you want to know how incredibly crooked these record companies are, I suggest you read Donald Passman's book "All You Need to Know About the Music Business".

  • Comment number 40.

    I love Spotify.

    I used to have 20Gb or so of MP3s that had accumulated over the years from various sources. I never listened to them. There were too many and I was overwhelmed.

    With Spotify I now listen to and discover lots of new music. Its radio function throws up lots of artists previously unknown to me.

    All this - and the artist gets paid.

    :O) x

  • Comment number 41.

    All this - and the artist gets paid.

    Really - how much? As opposed to how much goes to their record company.

  • Comment number 42.

    Music revenue was always going to fall. Cheaper technology to record music, leads to more artists and a fall in the value of music. Especially with competition from artists providing music for free and users spending less because they get their fix from social music sites (Youtube, Last.fm)

    However the music industry would lead you to believe it is primarily from piracy. I've always thought if you want to increase the number of people using legal services, education is key. Not statistics used to favour one side, but facts such as who benefits from purchases and how this is re-channelled into finding new acts etc...Let's face it, in the digital era, there will always be piracy.

    The music industry may be responsible for getting P2P blocked in Universities (it certainly is in mine), but recently I've been finding MANY legal sites using bittorrent technology to distribute their content. The lobbying of this industry has now led to negative ramifications on other businesses and services that are adopting P2P, without stemming the original problem.

    Additionally, music has not added value for a long time now. Record labels have been content to supply their item for minimal cost. How about digital booklets for ALL music like their retail counterparts used to have? iTunes has tried to differentiate themselves this way with iTunes LP. Where is the competition?

    I think the future is a subscription service (with competitors), that will only sign up the pirates if the collection of music is comprehensive. This requires the co-operation of the major music labels to make ALL their content available. I wonder whether the music labels will realise their fortunes rest on each other. If not, we'll see the music industry struggling for a lot longer.

  • Comment number 43.

    Anyone else remember "home taping is killing music"? A music industry slogan from a bygone age, it turned out to be utterly false, like pretty well everything else they've said on the subject of copyright. It's the commercial hangers-on, not downloaders, that have created a cultural desert.

    Still, they seem proud of their efforts, these record companies, so let's all keep paying them. Surely they deserve that for their creative input?

    Not to music, obviously, but they've certainly got plenty of imagination when it comes to trying to crimialise everyone who doesn't give them money (not to mention most of theose who do).

    I don't download music, personally. I have a large collection of good stuff on CD and older formats, so I get by quite well without JLS or Robbie Williams. And nowadays, before paying for something, I'd want to be sure that the artist is getting a decent share of the payment - say 75%, that seems fair, doesn't it?

  • Comment number 44.

    Spotify is very, very close to being the saviour of the industry, as I've said before a number of times. Things which need to change to make that achievable:

    1) Every label of any size needs to be involved, as does every artist. None of this lacking the Beatles, or Metallica - everyone needs to be there.

    2) Essentially unlimited offline caching needs to be possible, so that those people with bandwidth limitations or who are often without an internet connection can always use the service.

    3) The price needs to stay reasonable. £10/month is perfectly fine IMO, but taking it much higher than that is pushing it - you'll lose a lot of potential customers, particularly young people (who, let's face it, are the ones you really need to convince).

    4) The recording industry needs to stop being such an evil corporate machine. Stop taking legal action against people who download music, it does nothing for your image, scares nobody ("it'll never happen to me") and makes people hate and resent you. Admit that piracy isn't the only cause of your lower profits and realise that you overcharged us horrendously for decades.

    If you can achieve those four, you've got it in your grasp guys, seriously. The only addition would be to give the artists a better deal - the raw deal most get is the biggest justification most people use for piracy, and changing that would win a lot of hearts.

    Keep a free service going, but provide similar limitations to those that you have now - small caches, no offline playback, some recent releases not available. Make the premium option more attractive as outlined above and people will flock to it, though I realise you need to convince the industry fat cats that £120/year is actually a pretty damn good deal to get out of any consumer and, greedy unreasonable bastards that they are, that may be a challenge.

  • Comment number 45.

    The only thing the music industry has done is hold back the creative output of musicians. We would have much more creativity in both music and its business methods without them. Simply observe how they've held back using the Internet as a delivery method.

    Get rid of copyright and let the music industry die.

  • Comment number 46.

    #39 is right - the bias by omission on these kinds of stories, from every major news outlet, is horrific. It's not like there aren't authoritative voices on the other side of the argument - Pirate Party UK, Techdirt, TorrentFreak, and the countless artists who operate independently of labels - so why not use them?

  • Comment number 47.

    @46 - because the TRUTH won't keep Simon Cowell in his luxury penthouse(s)!!

    The biggest piece of misleading information constantly spouted is that "1 copied track = 1 missed sale". NOT TRUE. I have downloaded all my ALREADY OWNED CDs - mostly scratched or to prevent damage, yet those downloads are counted as a missed sale!! Pathetic. Let's see some REAL JOURNALISM here please BBC and report on both sides and present FACTS, not the latest music industry press release.

    Fear and hype is bad enough, but what's worse is that the governments are so easily swayed by this and bend to their every whim. It really seems the phrase "Money talks" is quite right. It wouldn't be so bad if it was our voices being heard, after all, it is our music they're using to bribe officials.

  • Comment number 48.

    "Because Oxford is just a collection of colleges (each independent from each other) you will find some colleges ban it and some won't, which is why you've had reports of students still using it."

    This is sort of true - the ban is university wide, but the application varies from college to college. Some will block it so that it is inaccessible, others will simply warn students that they aren't permitted to use it.

    Anyway, Spotify isn't being banned because it's p2p - it's being banned because of the bandwith consumption involved in using it. The fact that it's p2p is only relevant because the University only allows authorised p2p, and Spotify is now not authorised.

  • Comment number 49.

    @48; No, really - it's banned purely because it's p2p. By all accounts Spotify doesn't actually use all that much bandwidth, especially when compared with, for example, the current streaming version of the BBC iPlayer, which is not p2p, and therefore also not banned.

    The Oxford rules on p2p are here:
    http://www.ict.ox.ac.uk/oxford/rules/p2p.xml.ID=regulations
    In a nutshell, all p2p is banned, unless it gets a specific exemption for academic or research purposes.

  • Comment number 50.

    The music industry has had overpaid execs at the top who managed to fleece the public with CD's in the 80' & 90's. It totally ignored the internet when it should have embraced it, which is why it got into the mess it is in and for me thats no bad thing. Overpaid execs, payola, fraudulent contracts are just some of the major things that are wrong with the industry. We harp on at the banks now but what the head guys at the major labels have been paying themselves has been scandalous. Spotify doesn't have the capacity to become a global service 250,000 paid up members sure thats ok but it needs a lot more (4-5million) to be able to influence the downloaders. With adverts isn't Spotify just commercial radio without the inane chatter of a human.

    In actual fact would it bother me if the major labels all went bump not one bit as the chance of that happening is zilch, why? two words back catalogue!

    There's a great book called 'Appetite for Self-destruction' by Steve Knopper which explains how the music industry arrived at it's current state and it'll have you shaking your head as you wonder how labels got away with what they did. Dinosaurs with their big salaries still trying to bring back the old days and not looking forward to the new technology.

  • Comment number 51.

    Errr...this post was not about the rights and wrongs of illegal file-sharing but about the economics of Spotify - but most of you seem to have ignored that.

    But to deal with the complaints - on the news story about the IFPI report you will find quotes from Jim Killock of the Open Rights Group, one of the most authoritative voices opposing the music industry's view of the world.

    I have also reported at length the fierce opposition to sections of the Digital Economy Bill which is being opposed not just by the likes of the Pirate Party but some powerful corporate lobbyists from Google, Facebook and most of the UK ISP industry.

    What does seem clear though is that the music industry - with or without the labels which many of you would be happy to see die - does need some kind of online business model that works. And this post was about the search for that - not about the rights and wrongs of file-sharing.

  • Comment number 52.

    "Errr...this post was not about the rights and wrongs of illegal file-sharing but about the economics of Spotify - but most of you seem to have ignored that"

    Rather like the way you ignore everything that isn't handed to you on a plate by your exec chums.

    And enough with the 'Errr', you patronising little man.

  • Comment number 53.

    Now that we've been told off, perhaps we should consider the economics of Spotify. £10 a month for, as others have pointed out, a radio station free of DJ's. Okay that's not entirely fair. You can preselect the tunes you want to listen to, and if you want, click on a little link to download the track to your PC, as an mp3. The question is, why would you ever bother with the £10 fee to remove the advertisements if all you are going to use it for is previewing and then possibly downloading the occasional track? Alternatively if you decide that you like the idea of Spotify and think that it's worth the £10 a month then why would you ever download an mp3 version on to your PC. Aren't you just paying for the same content twice? All you're really doing is paying for the privilege of picking where the track is stored, on your PC or in the "cloud".
    In the headlong, blind rush to the internet with it's streaming or download music services, something interesting has happened to the good old CD. They've become as cheap as chips. In the "glory days" the Music industry now harks back to, trying to buy one CD for less than a tenner was tricky enough. Now? You can, with not much effort buy three. Not the usual bargain basement karaoke / 1940s back catalogue / Goons Greatest / selections but proper albums. For example I bought Human Leagues "Dare" Jeff Buckley's "Grace" and The Beta Band's "Hot Shots Part 2" and got £1.03 change from a tenner. For the same amount Spotify I get to stream low quality facsimiles, free from advertisements that I'll never own, unless I'm prepared to pay a premium to download another low quality facsimile. Frankly I think I'll pass.

    BTW RCJ you should have a look at an interesting music streaming site http://8tracks.com/home. It attempts to add a "social networking" aspect to the enjoyment of music by updating that old stalwart that was "mix tapes". It might be worth a look at??

  • Comment number 54.

    try this url instead http://8tracks.com/about

  • Comment number 55.

    Rory - you said:
    Some of the key figures in the music and video industries' battle against web piracy gathered this morning to issue a couple more dire warnings about the threat posed to artists and culture by file-sharing.

    Can you see why people might have got the idea that this was somewhat about file sharing, and the music industry's attitude to it?

    Besides which, the economics of any business are intimately tied to what it's competition does - it's not enough to offer a decent product, it needs to be better than the other guy's. Spotify is competing with (amongst others) file sharing systems, and if the feeling is that the file sharing alternative is still better than Spotify's offering (maybe, in part, because it doesn't channel money to the hated record companies), then that will necessarily have an effect on the economics of Spotify.

  • Comment number 56.

    As others have said, it's nothing to do with the legality of P2P - at many universities, ALL P2P traffic is banned. This is partly because these are high-speed networks used by students and staff, and P2P software has been known to dramatically slow these networks.
    The admins then give the (true in some cases) excuse that it's down to copyright complaints - it's better than admitting that their network can't (always) cope. So, if it's P2P, it's banned. Use P2P, and your internet access can be suspended. A walk to the administrator's office is then in order, to beg for forgiveness, and promise never to do it again. This keeps the admin team in work- half of their visitors need their passwords resetting (everyone seems to forget them at some point), while most of the rest need their internet access back.

    The ISPs obviously don't have this luxury. If they start blocking connections left, right and center, people will ring up, complain, and stop paying until their internet access "works". The ISPs can try to give the same excuses as the unis, but they'll still end up losing customers, and if they go after the "wrong" customers, they could find themselves taken to court, for stopping their customers from using ebay / online banking by accident.

  • Comment number 57.

    Ewan - yes I agree that the post starts off talking about more "dire warnings" from the music industry about illegal file-sharing. But in no way do I imply that those warnings are credible - it's just a starting point to illustrate how desperate the industry is for Spotify to work.

    And of course you're right that its economics have to be seen in the context of the alternatives, namely file-sharing. But there you're mirroring exactly what the music industry says - that it's very hard for legal "freemium" services to compete against free illegal offerings. Whereas the argument from the pro-filesharing lobby has been that music fans would turn to legal services once they were cheap and user-friendly enough.

    PS: Thanks for your contributions to the debate here

  • Comment number 58.

    Reminds me of the situation in the 80's when home computers such as the Spectrum etc came into being, there was a big thing then about copying of games software. Such software was quite expensive to buy and I heard it said that the home computer industry would not have taken off in the way that it did. While I don't condone piracy, it shows another side that is perhaps conveniently ignored.

    These days a lot of high quality commercial software is given away free with a view to generating revenue as a side product, for example through paid customer support. Perhaps music should follow a similar course by become less reliant on the music itself and looking at making money from what the music can lead to.

  • Comment number 59.

    first there was the musician, he performed to people (fans would pay to see the musician again and again, those who didnt like, didnt go)
    then there was the radio, who paid the musican to perform
    then there where the first labels, who mostly specialised in a style of music and, probably, cared about the musician (now artist) and made some money for both.
    then music became 'main stream'/big business and was spoon fed to radio listeners by a few people who decided what people 'should be' listening to, some people made a lot of money and music was diluted and celebritized (only pretty people can be 'pop stars').
    Now we have the net (piracy in music has happened since the tape was created, from taping off the radio to bootleg gig recordings)
    the net gives us access to any musician who cares to put their craft out there, spotify and the likes are the new 'record labels'. Musicians who are listened to, should be paid, those who are not, should not. We now have the choice of who we listen too (I belive spotify also has independant artist). Hopefully, big labels will die, 'celebritiy musicians' will disappear and we'll be left with people doing what they love and (hopefully) making enough to live.
    Dont forget, the BBC is an enforced premium service all uk citizens are (alomst) forced to pay (therefore, the BBC gives money to major labels - by only playing 'popular (spoon fed)' music and the radio!).
    Musicians are being set free, if they're good their fans will buy stuff. If not, its back to shelf stacking in tescos.... (a true fan will still buy a cd/pay for a track cause they want that musician to do more) 'fads' will die, artists will survive. (with luck)


  • Comment number 60.

    @BeyondThgePale - you think the "music industry" is "Lady Gaga? Cheryl Cole? JLS?" and you think watching a movie at home is better than watching it at the cinema.

    You then go on to criticise others for "not understanding" the industry.

    Says it all really.

  • Comment number 61.

    @41

    "Really - how much? As opposed to how much goes to their record company."

    Musicians have been ripped off by their labels.
    Some of the 70s bands never received royalty payments for CD sales of albums released in the 70s because CD technology was not in their contracts.

    All contracts now state words to the effect of "for technology yet to be invented".

    In the first few years the credit card companies were earning more than the
    songwriters for a download.

    The split now (Jan 2010) between iTunes and labels is - 30/70.
    So, the labels cannot complain they are not making enough money.

    Song writers do get more than the credit card companies now.
    They probably owe a lot to McCartney and Ringo Starr for the improved deal.
    They kept The Beatles off iTunes until a better deal was in place.

    It will be worth seeing how DNA music shake up the business.
    Digital books, as mentioned above, and all sorts of extras, buying tickets for gigs, info about the band etc will all be contained on one file.

    See here:

    New MusicDNA Format Wants To Bolt Rich Media On To MP3

    http://paidcontent.co.uk/article/419-new-musicdna-format-wants-to-bolt-rich-media-on-to-mp3/

    I do not have any connection with DNA Music but I can see how that may take off.

    --------






  • Comment number 62.

    Re Spotify and small labels?

    Yes, small labels can get their work on the service.

    _______

  • Comment number 63.

    I hope Spotify keeps going. I use the free service, but I was at a party in my friend's flat and we bought a day pass. 99p for all the music we needed (and more!) although the lack of some of the big name artists was slightly annoying (Metallica, Led Zep etc). Once these artists sign up Spotify will possibly offer the best service available (including piracy) since it offer the 'instant' capabilities that downloading doesn't.

    As for the comments about music quality going downhill, what genre is it that you like to listen to because if you step back from the mainstream there is more high quality music out there than ever before. Just stop expecting the best bands to be handed to you on a plate!

  • Comment number 64.

    I don't think Spotify's reached it's full potential yet. It's awesome tool, no doubt. Although there's still flaws which make me less likely to use it - namely the suggestion feature. It's just not as good Last.fm in terms of really understanding what you like.

    There's still however a great list of awesome features like the offline mode which rocks.

    It's still priced too high for me though, there's just not a big of range of music on there yet (drum and bass especially) to make me purchase it.

  • Comment number 65.

    "60. At 2:37pm on 25 Jan 2010, Aidy wrote:
    @BeyondThgePale - you think the "music industry" is "Lady Gaga? Cheryl Cole? JLS?" and you think watching a movie at home is better than watching it at the cinema.

    You then go on to criticise others for "not understanding" the industry.

    Says it all really."


    Phhhhweeeeeeeeeeeeee!

    Hear that? It's the point going right over your head.

  • Comment number 66.

    Now run along, back to the industry that everyone else is thoroughly enjoying collapsing around its ears.

  • Comment number 67.

    Spotify is quite handy and puts me off downloading anything I want.

    On the otherside of things it allows me to do analogue recordings of what I want...and edit out the adds.

    ok devils advocate here.

 

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