M&E Daily

Spotify Apps Promise ‘New Direction’ for Digital Music Service, Raise New Monetization Issues

It’s easy for Spotify’s paid subscriber base to appreciate the new set of apps for the digital music service. To date users have largely been left to discover new artists, albums and tracks on their own, from a sea of licensed titles whose depth and boundlessness can be as daunting as it is enticing. With free apps from the likes of Last.fm, Pitchfork, and Rolling Stone, Spotify subscribers gain curators—and likely comfort, in that the service becomes more tailored to how they listen to and discover music already.

Two questions immediately come to mind, however. First: how much is a Spotify subscriber’s discovery of a new song or album worth? Under conventional industry wisdom, discovery of an artist via Last.fm may have led to a listener actually purchasing an album. Now, access to that same album via Spotify may suffice for the subscriber. Going forward, Spotify may face a Netflix-like issue of whether streaming license fees spell enough monetization for content owners to hand over unlimited access to new releases and catalog titles.

Second, as CNET points out: what’s the opportunity of Spotify apps for developers, when they are barred by the music company from charging premiums or including in-app ads? The company lacks a revenue-sharing equation to address this issue at present. (As they exist now, Spotify apps for Web properties like Pitchfork seem to obviate the need for subscribers to check in with their ad-supported sites.) On this score, Charlie Hellman, Spotify’s director of product development, tells Evolver.fm that “the potential for people to build a business on the Spotify platform will happen over time….This is day one, really, of us transitioning from being an app to being a platform.”