Spotify makes the million

Spotify have reached an impressive milestone:

It seems like only yesterday we were hatching ideas for a new music service in a tiny office-cum-apartment with a broken coffee machine, and the party we threw having reached one million users almost two years ago today was one to remember.

So it’s with a sense of real pride and excitement that we can announce a new milestone today, having welcomed our millionth paying subscriber to the service.

Even if you assume that all those subscribers are on the lower tier, that means about five million quid in revenue every month. You almost wonder if they really need to put so much effort in to trying to launch in America.

Not the end, but perhaps the first of the Last.FM

For the time being, in the UK, Last FM on the web remains free, but the service has announced it is going to start charging for mobile.

Now, I like Last.FM, but charging for a service where you can't control what track you're going to hear, or even what band is coming next?

Last FM's Matthew Hawn even claims they don't really need the money:

"We think that the best experience is ad-free," said Mr Hawn, Last.fm's head of product.

"It's not that we're losing buckets of money on our service... but we're trying to make rational decisions about our business model."

If Last FM really believes the best experience is ad-free, then wouldn't the "rational decision" be to launch a paid-for ad-free version alongside the free, ad-supported edition?

Last FM is pretty good for a freebie; but surely if you just want songs you might well like coming at you in a random order, you've got the radio?

Rdio wants your money

Rdio? Seriously? Niklas Zennstrom and Janus Friis, the people who brought us Skype and Kazaa, have chosen that as the name for their music subscription service:

Like several others in the marketplace, Rdio -– pronounced “AR-dee-oh” -– promises streaming, cloud-based access to a library of millions of songs for a flat monthly fee.

Desktop and mobile access via iPhones and BlackBerrys costs $10 monthly, while desktop-only customers pay $5.

That’s an increasingly familiar price point: MOG, which went live last fall and is now preparing its mobile launch, will have the same two-tiered price system, while Rhapsody and Thumbplay both offer desktop-plus-mobile plans for $10; European fave Spotify offers free ad-supported streams and a two-tiered premium plan.

At the moment it's US-only, and doesn't appear to offer anything compelling in return for shoveling cash into the subscription slot in return for nothing to take away.

It's worth remembering that before they promised to change the music world with Rdio, Zennstrom and Friis set out to change the online video world with Joost. This has more of a Joosty feeling to it than a Skypey one.

Spotify unveil their the revamp

A couple of weeks ago, Spotify were promising a big new approach, and they've just announced what it will look like:

First up is Spotify Unlimited, which offers you round-the-clock, ad-free access to Spotify on your computer. Create playlists, build your own library, share music with friends - and all for only €5 a month.

Also available from today is Spotify Open. Open offers new Spotify users the chance to try out the service without the need for an invite, giving access to millions of tracks for up to 20 hours every month - that’s equivalent to listening to 25 albums or 300 tracks EVERY month!

The first one is curious - it suggests that they're having difficulty getting people to sign up for the full-subscription model, and so have come up with a lite package which does everything the full subs do, except for the mobile bit. Initial instinct is that it's not cheap enough to persuade people to change, and they've probably got the offering the wrong way round - I could see people interested in a mobile-only subscription, but doubt a mildly cheaper desktop-only version will do much to drive sign-ups.

The stripped-down, invite-avoiding free version, though, might work - allow people to find out exactly what's on offer, make them yearn for your product, and then say 'now you must pay'. It works for smack dealers, why shouldn't it work for Spotify?

I do wonder if the cut-off point for free is going to work for them - I'm not about to slam Spotify for being too generous, but if you really want people to sample and then pay, you might want to think about not setting the paypoint higher than 'more than enough for most users'.

Edgar Bronfman hopes to detract attention from how poorly his label is doing

Warners' Edgar Bronfman Junior has been doing some thinking aloud about advertising-supported music. He doesn't like it:

Warner chief executive Edgar Bronfman Jr said: "Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.

"The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future."

The funny thing is, while Bronfman was talking, the public was also holding a press conference:
"The 'ratchet up the price point and slather stuff in DRM, and hope that the public won't give up on legal music and go back to illegal stuff' strategy is not the kind of approach to listening to music online that we will be supporting in the future" said the public.

Bronfman has seen the future, and it's just full of people who aren't giving his company loads of money who are desperate to do so:

He said the focus would be on promoting streaming services that require payment, which he said could appeal beyond those who currently pay for downloads in stores such as Apple's iTunes.

"The number of potential subscribers dwarfs the number of people who are actually purchasing music on iTunes," Mr Bronfman said.

Well, yes. That's true. The number of people who fancy something to eat dwarfs the number of people who are currently getting organic veg boxes, but only a dreamer would picture a world in which everyone is waiting for a farmer to drop off a carton of muddy celeriac and two dozen leeks.

Edgar is just letting off steam. Presumably. He knows that if you take away the advert-supported services, you'll increase demand for non-supported services far faster than you'll persuade people to start handing over large sums for a subscription. I don't know for certain that Bronfman delivered his speech shortly after throwing a coin in a well, or once he'd blown out all the candles on a cake, but he's wishing, isn't he?

Spotify are just rolling their eyes and pulling a 'bless him' face:

To be clear WMG is not pulling out of Spotify. Media is taking things out of context. So don't worry-be happy :)

Of course he's not pulling out. Bronfman might be deluded, but he's not dangerously deluded.

We7 throws down challenge to Spotify

The big tech announcement of the day - oh, alright, if you discount Honey, iBlew Up The iPhone, is that We7 is launching a premium, ad-free service in direct competition to Spotify.

The headline price is lower - £4.99 a month against Spotify's £9.99. But the main impetus to upgrade to a paid account is less the loss of ads, and more the ability to suck music to a mobile. And this is, in We7 parlance, "Premium Plus" (a premium on a premium?) and will cost another fiver. In other words: it's the same price as Spotify.

Spotify revealed the other day they've had 250,000 subscribers jump on so far. I'm not convinced there's many other people who want to spend £120 a year on a radio.

eMusic hikes prices, blames everyone else

With the price of online music rapidly approaching zero, it's something of a surprise to discover eMusic raising its prices. Apparently, it's everyone else's fault:

Danny Stein, eMusic CEO: Our existing labels, for the most part, have been asking us to raise prices for a long time. What I told the New York Times is that we were looking for a “catalyzing event” to do it. And really, the catalyzing event is adding catalog, adding more content. We used this as an opportunity to do it, but we didn’t do it because of Sony. We did it because in order to sustain the economics for our label suppliers and their artists, we needed to do it.

So it's the indie labels' fault, and Sony provided a "catalysing event" - which seems to be weasel words meaning 'a smokescreen to cover our asses'.

The thinking seems to be that users would go 'oh, we've now got access to Sony's catalogue, that's worth a few extra bucks'. Although, presumably, current eMusic subscribers have chosen eMusic quite happily without access to Sony's stuff. It's a bit like adding photos of dogs to the kitten library and trying to charge more from cat fans.

But, hey, Sony isn't all Billy Joel:

Stein: Definitely. The reality is that eMusic’s customers love music of all flavors and genres, and there are a lot of less mainstream names [artists with albums soon to be sold on eMusic as part of the deal include Captain Beefheart, Black Rebel Motorcycle Club, Kate Bush, Miles Davis, The Clash, Miles Davis, Franz Ferdinand, Robert Johnson, Kings of Leon, Modest Mouse, Psychedelic Furs, Lou Reed, Patti Smith, Spiritualized and the Stone Roses], and this catalog is rich in jazz and classical. In addition, there are more mainstream artists who will benefit the less mainstream artists dramatically by allowing us to use our editorial expertise to compare and contextualize the lesser-known artists with the better-known artists so that the lesser-known artists have more exposure. We have a feature called “Six Degrees”…

I think the list of bands was inserted by Wired, rather than eMusic, but anyone who thinks Kings Of Leon, Kate Bush and The Clash are operating beyond the mainstream must have a pretty narrow view of what counts as mainstream.

Cathy Halgas Nevins, vice president of eMusic corporate communications: Yes, that’s going to be a new editorial feature where we’re going to take an album that might be really well known and show you some independent artists that were influenced by that record who you should know about

Hmm. I'm not sure if I had subscribed to an indie music library I'd be that excited at being told I was going to pay more for a service because it can tell you that if you like Bruce Springsteen, you might like Woody Guthrie. It's a nice feature for new subscribers, tempted in by the Sony stuff (if there are any) but I can't see existing subscribers thinking they're getting something worth the money.

And couldn't eMusic do this without the Sony catalogue? You don't actually need to have Nebraska on the site to say "if you enjoyed this record, here are some that might have been an inspiration on it."

There's also some confusion about the new 'album-download' rates:

Stein: We’ve never had album pricing before and at times that has hurt the service and the user experience. We’ve heard from our customers that for albums that may have 20 tracks, you get charged for 20 tracks. Our new pricing is simple. It’s 12 credits per album, and that’s if the album has 11 12 songs or more [Stein apparently misspoke]. Below that, it’s by track, so an album with eight regular tracks will cost eight credits [each credit costs 42, 45, or 50 cents depending on which plan you have; credits expire after 30 days]. We’ll eventually roll out some other price points for albums to give our labels more options.

Yes. That sounds like a situation that needs some more price points rather than fewer. Interesting, though, to see eMusic effectively admit that they see their role as facilitating the needs of labels rather than providing a service for their subscribers.

Ash plot 26 single sequence

Ash, Billboard crows, dedicate energies foolishly. Gonna have interesting journeys, launching multiple new output, pursuing quite rigorous stunt. They'll upload various xylophoneless yodels... oh, bollocks... zebras or something.

Without sounding like the Radio Times definitials: Ash are going to release a single every fortnight, with the titles of tracks following strict alphabetical order. It's like The Wedding Present's Hit Parade, only even grander and slightly madder in scale. I think it was the Melody Maker that described half the fun of the Hit Parade was because it was like watching a drunk staggering back from the bar with a tray full of drinks, and wondering if he'd complete the journey without disaster.

Spotify plan super-premium service

Spotify is about to try a new approach to persuade people to sign up to a subscription: a tenner a month will give you unlimited downloads. DRM free downloads at that.

On a straight cost-comparison, all-you-can-eat for a tenner a month looks like a much sweeter deal than iTunes per-piece pricing; the weakness of the offer is if people look at the £120 annual commitment and feel that it offers better value than grabbing downloads as and when for a quid a time. Are there currently enough people downloading more than 100 tracks a year to make it viable?

And the other question is if current Spotify users will want to pay £10 a month to be able to play whatever track they want to hear, when they want - as isn't that what Spotify are already offering them for more-or-less free? Are there enough people who want to lash out over a hundred a year to be able to keep the tracks forever?

[UPDATE: @DanRebellato tweets the following:

Apparently, it's "100% not a goer" according to Jim from Spotify. :-(

]

Zune: your subscription is also a purchase

The price cut might have looked kind of desperate, but the attempt to raise interest in the Zune subscription by allowing some songs to be kept 'forever' is a much more interesting move by Microsoft.

I'm not entirely convinced, though, that the idea will work. Buying songs to keep forever is simple to explain. Renting songs you can listen to while you keep your subscription current is a clear proposition. Renting all the songs to listen to while you keep your subscription current, except for ten each month which you can keep even after your subscription lapses might be innovative, but it isn't easy to understand and will probably do as much harm as good - it stresses "most of your music will vanish if you stop paying" as much as "a handful of songs are yours forever".

Then there's the vexed question of how you actually keep the songs forever - ten a month from your bucket of songs introduces an admin task every four weeks. The Terms and Conditions explains:

You will also receive song credits for up to ten (10) downloads of audio sound recordings from Zune Marketplace during each month of your Zune Pass subscription, at no additional cost to you. Content purchased with these song credits may be used under the terms listed above in Section 14.1 and will not expire when your subscription ends. These song credits are non-transferable. Any unredeemed song credits will expire at the end of each monthly period and will not rollover to subsequent monthly periods.

It's not entirely clear from that if you have to buy with special magic credits at the outset, or if you can apply the credit to a tune you have already downloaded under your usual subscription, or if you have to go to the store and re-download the track all over again, this time with the golden pass.

PaidContent's Staci Kramer - who is a happy Zune user - wasn't any clearer:

Signing into Zune just now required accepting a new terms of service in an unnecessarily complicated multi-screen process. So far, I can't tell how I would know this option is supposed to be available—and I can't figure out how to make it work. For instance, when I add a song to the cart, then look at the cart, it's empty. Another variation brings up an error message. I'll try again in the morning.

A difficult sell with a complicated process attached? It's the great smell of Microsoft. Still, at least they're trying to fix the fundamental flaw of subscription services - why pay for something you can never own?

Comes With Music doesn't, actually, come with music

There's been much excitement over Nokia's Comes With Music phone, pegging it as a simultaneous iPhone and iTunes killer. And you can see where the thrill lies - you buy a phone, and you get access to Nokia's fabulous music library, forever, for free.

Only now that a deal has been struck with a carrier - 3, in the UK - it turns out to not be quite so sweet a deal after all. Andrew Orlowski runs through the small print:

Comes With Music reportedly bundles "free and unlimited" music downloads with selected Nokia handsets. But actually, it doesn't. Downloads are limited to 120 per year*, and there's an upfront charge of £129.95 at Carphone Warehouse. So it more accurately resembles the Britannia CD club model: pay up front and get some albums.

Sharp-eyed readers will notice the weasel words in Nokia's press release:

"Comes With Music offers one year of unlimited access to the entire Nokia Music Store catalogue…"

But access to the Store is not the same as unlimited downloads, of course. Asked about this, Nokia's EVP of entertainment Tero Ojanpera repeated that unlimited meant unlimited access, not downloads.

So, that would be Comes Without Music But You Can Pay For Music If You Like. Just Not Too Many Tunes, Eh? Don't Go Mad Or Anything. Two Songs A Week.

Oh, and if we've done the maths correctly, at £129 for 120 songs, that's not only not free, but more expensive than average downloads.

[UPDATE: Nokia's PR team have been denying there's a 120 song limit but admit there is a "reasonable" usage clause in the deal.]

NME points a finger

An email from Daniel B points us in the direction of an NME report on file sharing:

Wow - do the NME have a legal team of any kind checking their website postings, or all they all busy fending off suits from Morrissey?

Are they *sure* Sendspace and Megaupload are illegal? And are they
sure the Guardian said they are? Maybe the Guardian site has changed,
but there's no mention of either in the linked piece, which was "last
updated at 07:12 on September 29 2008. "

It's a good question - there's nothing illegal about Megaupload as a service; it could, theoretically, be used to share copyrighted material without the copyright holder's permission, but that would be in contravention of the company's terms of service. You could use a Volkswagen to ram-raid a branch of Dixons, but that doesn't mean the Golf is an illegal car and it's surprising that they've singled out a couple of sites which have serious, legal, business uses at their heart for the pointy-fingering.

It's actually a pity, because it obscures what is a useful piece of research. It's a tiny sample and we tend to not accept these things as being truly representative, but taken on its own terms it's quite revealing:

Some 38 per cent said the [music subscription] services would lead to them reducing their use of illegal file-sharing websites such as Sendspace and Megaupload, reports The Guardian.

The survey also found that 45 per cent of users would buy fewer CDs because of the services, while 47 per cent said they would be discouraged from using digital download stores like iTunes.

So, in other words, the mobile subscription services which the music industry reckons will be their saviour are going to be better at hitting actual legal sales than stopping piracy.

The NME's headline on the article is the bullish

iPhone rivals to kill off internet piracy?

- to be fair, they do put a question mark on there, but given the survey could only find 25% of people with a "keen interest" in taking the services, and only a third of those suggested that doing so would reduce their use of filesharing sites, we're not supposing the lawyers the RIAA keep writing cheques to will be feeling the cold wind of credit crunching just yet.

It's yet another one of those only charts that count

As the Top 40 struggles to find some sort of relevance in the digital world, the Official Charts Company are launching new charts as fast as the music industry dreams up new formats: They're about to launch a chart showing the 'most-listened to' songs via subscription services. They're excited that this is the first of its kind in the world; they seem unaffected by a doubt that nobody else is drawing up such a chart because it's not really that exciting.

This quote from the press release is fascinating:

Gary Warren, HMV, said:

“The development of the Official Subscription Plays Chart can only bring positive attention to the music industry. Subscription activity is a growing pastime for many consumers and gives great low cost access to any music content the listener has a desire to experience.

“I frequently use my own HMV subscription account to access new music and sample recommendations from friends before adding new CDs to my collection. The new chart is a goldmine for spotting early trends.”

"Subscription activity is a growing pastime"? Really? What does that mean? "I'm bored - I know, I might pass a couple of hours setting up a subscription to something..."

And since most people will be listening to music they already know they like, in what way is the chart going to help people "spot new trends"? Isn't there at least a risk that the chart will be a crushing demonstration that given an opening to the wonders of all the world, people will just listen to Bohemian Rhapsody all the time, every day?

Napster cuts prices

A sign that Napster is starting to struggle: it's offering a price cut in the face of falling subscriber numbers. PaidContent reports:

When Napster’s (NSDQ: NAPS) Q308 subscription numbers are released, remember the mid-August sale promotion offering 6 months for $70 instead of the usual $127—a discount of more than 45 percent—complete with 50 downloads of MP3s that can be kept.

While it's great that Napster's offer finally seems to register that people would really much prefer to have something to keep forever in return for their cash, isn't it going to just point out that most of the music you pay for vanishes if you mention that "I'm also gonna give you fifty mp3s all for your very own, forever..."?

Napster drops more users

What's perhaps surprising is not that Napster has dropped 52,000 subscribers over the quarter; more that, somehow, it's still managing to pull revenues of USD30.3million in that time. You have to hope they're investing that cash carefully - i.e. not by buying stock in clumsy music subscription businesses.

Here comes another iTunes killer

That iTunes has survived more would-be assassins than James Bond and Doctor Who combined doesn't seem to bother those who still trot out attempts at an iTunes killer. The latest media hat being thrown into the digital circle is that of BSkyB - who, lest we forget, are one of the country's biggest ISPs as well as a TV operator.

So far, though, their plans look a little weak. Only Universal is on board, and the idea is for a subscription model rather than a pay-per-tune approach. Most subscription services so far have struggled, partly hobbled by the tendency of tracks to disappear if you stop paying - although the Guardian's report sort-of-implies that the BSkyB service might offer mp3s, and thus not implode if you cancel your direct debit to Rupert. Like a major label eMusic:

The subscription will give users unlimited access to streamed tracks plus a set number of download-to-own songs, initially to Universal Music's catalogue of hundreds of thousands of songs from artists including Amy Winehouse, U2, Kanye West, Duffy, Rihanna, Eminem, Elton John and Abba.

Downloaded tracks will work on any device that can play MP3s, including iPods and mobile phones.

So, there's a potential appeal there - if the other labels get on board, and the pricing is right, the marketing muscle of Sky could offer a service which, while never likely to kill of iTunes, might just give Steve Jobs a nasty slap.

Talking with a mouth full: Warners in all you can eat talks

The music industry looks dead set on adopting a potentially calamitous piecemeal approach to all-you-can-eat pricing, with one label talking to a single ISP here, another cutting a deal with a mobile outfit there.

Warners, the Times is reporting, is talking to British mobile companies to bring a compelling 'as much music as you want, on tap, providing the artists were on Warners at the time they recorded it' proposition to the table.

Can anyone suggest if £3 a month for all of Sony-BMG's back-catalogue is a better deal than, say, £1.50 a week for EMI and Warners?

Sony BMG forget past, condemn themselves to repeat it

Having caught a cold on their Connect Service, Sony BMG have decided to have another crack at selling their own music online. They've announced half-formed plans for a subscription-based service.

They are even considering going ahead if they don't get the other major labels onboard, apparently:

[SonyBMG CEO] Schmidt-Holtz: “The offer is more attractive, the bigger the music selection. I am not saying that it wouldn’t be interesting if we do it alone. But it would certainly not as exciting."

Oh, yes, a Sony-only service would certainly be interesting, as in "isn't it interesting that three-quarters of all the music you could want isn't available on this subscription, let's try somewhere else."

Paying and paying again: Can subscription work?

Interesting stuff over on eMarketer, where they do some of the sums associated with a musical subscription service and suggest that - surprise - the labels might be expecting too much cash:

Forrester Research estimated that in the third quarter of 2007, 42% of all MP3 players owned by US adult Internet users were Apple iPods.

Applying Forrester's estimate as a market-share calculation, Apple could reasonably argue that any hardware-based iPod royalty should yield 42% of global industry sales, $1.2 billion of the industry's $2.9 billion total for 2007. That would equal roughly 14.5% of Apple’s iPod revenues for its fiscal 2007, or about $23 per iPod unit (assuming average per-unit revenue of $161).

That figure corresponds to the $20 Apple is said to be offering labels, according to The Financial Times. However, if Nokia is paying up to $80 per unit, as the article suggests, that would indicate a huge gap between Apple's price point and the labels' presumed expectations.

Actually, we'd say even the twenty bucks is over-priced: the 42% of US iPod owners shouldn't be replacing 42% of global sales - a massive chunk of that $2.9 billion is accounted for by sales outside the US and physical sales - and why should a person buying an iPod compensate a music industry for a share of sales that has nothing to do with digital downloads? It makes ten dollars sound like a generous amount, surely?

All the Apples you can eat

Reports over on The Register and the FT suggests that the long-expected iTunes killer might be... iTunes itself.

Apple are in talks with labels about introducing an all-you-can-eat subscription service - of the sort where you keep paying for music and own nothing at all - and it could be as close as just debating about how large the figure will be.

Obviously, the tracks under such a service would have to be wrapped in something to stop the (for the music industry) nightmare of people sucking down the lot in month one and unsubscribing.

God alone knows why Apple would want to get into such an unsatisfying deal - presumably it's a bid to offer the same sort of deal as Nokia are lining up for their customers.

[Thanks to Michael M]