Spotify

Soundcloud celebrates five years; releases impressive stats

Thursday, November 14, 2013 - 1:10pm

SoundCloud, the audio upload site sometimes positioned as the audio version of YouTube, turns five years old this week. The company blog celebrates the milestone, and mentions a few eye-opening usage statistics.

Upload traffic is intense, with an average 12 hours of content posted by users every minute. Also impressively, 90 percent of uploaded tracks get a listen, and more than half of them get played in the first hour. (In Spotify, only 80 percent of available tracks ever get played.) 

That last metric points to SoundCloud’s effectiveness as a social network. Users who develop large groups of followers can use on-site notification mechanisms to drive attention to uploaded tracks. In our testing, these attention-grabbing tools can start the “play” turnstile ticking away within seconds of posting. 

Sharing of original audio was SoundCloud’s founding mandate. More recently the site has made design and usability changes that encourage pure listening as the main engagement focus. It has worked -- SoundCloud reportedly has 250-million monthly active listeners. (Pandora has about 70-million.) 

Deezer reportedly headed to the U.S.

Thursday, November 14, 2013 - 1:10pm

If you visit the Deezer website (www.deezer.com) on a computer in the U.S., you see this notice: “Deezer’s music services are not yet available in your country.” That will reportedly change soon, as Digital Music News posts that the Paris-based streaming music subscription service will expand to the U.S. in January.

Though blacked out in the U.S., Deezer has rolled out an aggressive global expansion, serving users throughout Europe and in nearly 200 countries altogether. Geographic footprint is one measure of success, and usage footprint is another. On the second point, Deezer recently announced that its paid-subscriber base reached five-million users. 

Deezer has attracted several funding rounds, and is currently capitalized at $149-million

Can Deezer cut through the noise?

Streaming music has become a crowded segment in the last six years. Deezer, which started in 2007, preposterously claims to be “the world’s first music streaming service,” ignoring many pre-existing subscription and Internet-radio outlets, some of which were operating as early as 2001. Historical whoppers aside, the Deezer platform is robust, with 30-million tracks in the library and a strong reputation.

The U.S. market has been slower than parts of Europe to recognize the value of online jukeboxes such as Deezer. Swedish-based Spotify is Deezer’s most head-to-head competitor in non-U.S. territories, and it was Spotify’s U.S. launch in July, 2011 which helped whet American taste for on-demand streaming music. Other music services had been operating in the U.S. before Spotify’s invasion, but Spotify’s ad-supported free listening was the on-ramp to the experience for many uninitiated users. 

Deezer might not make a U.S. splash similar to Spotify’s impact in 2011. It is tough to differentiate in this market. Territorial accessibility is a waning claim to specialness, and the basic features of subscription services (random access to tracks, downloading for offline listening, artist-based stations, personalization via preference tools, social sharing) have become nearly indistinguishable from one platform to the next.

In this light, future business success might depend on distribution avenues that push brands in front of users on unavoidable, often-used screens. Car dashboards represent one such environment, which is why the “connected car” has become such an important and combative arena in the streaming music business.

Another must-own screen is the smartphone. Most music services deploy custom app experiences, but uptake depends on the user’s initiative to download and use them. A more forceful solution is to partner with a telecom company, as Rhapsody has recently done with its major Telefonica deal.

There are two major advantages to telecom distribution of music. First, pre-installation of the app and placement of the brand on the smartphone home screen. Second, the phone company owns a billing relationship with its users, making sign-up to a built-in music service easy and seamless. 

Deezer is executing the telecom tactic already, having partnered with Deutsche Telekom and several others. There is some speculation that Deezer will coast into the U.S. on a telecom backbone (Verizon is mentioned, but not substantiated). Doing so would have less free-market impact than an unaffiliated launch, but might make business sense.

However this plays out, it will be good for U.S. streaming fans to finally break through that “not yet available” Deezer roadblock.

Spotify sued for user playlisting

Wednesday, November 13, 2013 - 12:40pm

In an interesting, possibly unmeritorious case that one lawyer characterizes as a “battle of metaphors,” Ministry of Sound (MoS), a British record label specializing in compilation albums, has brought action against Spotify over user playlisting, a core Spotify function. The playlists at issue are ones that mimic MoS compilations.

According to a report in Time, the label does not license to Spotify, so its albums are not found in the service. But tracks owned by other labels, licensed by Ministry of Sound for its compilations, are in the Spotify library. Accordingly, Spotify users can listen to those tracks and add them to personalized playlists. The problem arises when users replicate MoS album collections as Spotify playlists.

The legal question is unusual, and possibly unprecedented. Is the ordering of an album collection by itself, and separate from branding, artwork, and track licensing, considered intellectual property? The usage displacement would seem to favor MoS’s argument: to whatever extent Spotify replaces album purchases, public access to a playlist identical to the listening experience of an MoS album would seem to impede MoS business interests. But Spotify is on legal footing with both its track licensing and the playlisting function viewed by itself. 

No prediction of how this will play out, but the case will be interesting to follow.

Spotify courting major new investment; would increase funding level by 41%

Monday, November 11, 2013 - 12:20pm

Spotify is reportedly in late-stage discussions to obtain 200-million dollars in new venture funding from Technology Crossover Ventures (TCV). Added to Spotify’s current funding total of $288-million, the new investment would raise the startup’s valuation by 41 percent. Spotify has received $288-million since its founding in 2008.

Technology Crossover Ventures invests in high-growth tech companies with a long-term horizon. TCV owns equity stakes in Zillow, Expedia, Facebook, Go Daddy, Genesys, Netflix, and many other companies. Year-to-date, RCV has invested at least $337-million dollars in some of its holdings.

Consumer-facing Internet music services have not been venture capital magnets for the most part. There is fear around the cost of content and the variability of that cost in the U.S. and around the world. At the same time, publicly traded Pandora is valued in the open market at $4.6-billion.

If the reports are true, and the number is accurate, Spotify’s imminent $488-million investment total is majestically higher than competing services Rdio ($17.5M), Slacker ($68.1M), Songza ($4.7M), SoundCloud ($63.3M), and 8tracks ($1.2M).

Spotify adds Songkick tour info

Friday, November 8, 2013 - 11:50am

Songkick, which identifies music tour stops by city, has joined Spotify’s app ecosystem. The concert tracking service can be accessed in Spotify’s desktop program.

Songkick hooks into the user’s Spotify music collection to recognize bands and artists of interest. It starts with that basic information to deliver immediate concerts and club dates in your home town. Everything is configurable; you can add cities and change your artist lineup. In the latter case, the app pulls you into Songkick proper makes you register there, so your Spotify settings don’t get altered by your Songkick preferences.

When Songkick suggests a concert, the information panel includes the venue name (obviously), a map, and a track list of the artist/band for instant listening. There is also a planning tool to keep your concert-going life organized.

We like this integration. It’s a perfect enhancement of Spotify’s native knowledge of your music taste. There are several other tour sites, but plugging that intelligence layer into your subscription music collection is an elegant convenience.

Billy Bragg tells musicians Spotify isn’t the problem

Thursday, November 7, 2013 - 11:50am

Singer-songwriter Billy Bragg has stepped into the Spotify debate with a Facebook post that’s getting picked up in the digital music news. Bragg joins Thom Yorke, David Byrne, Dave Allen, and others who critique artist-royalty system in spotify’s business model. In this diverse series of publicized opinion statements, Spotify is the proxy for streaming music platforms generally, and the main complaint is that musicians don’t get enough money from them.

Bragg spins from a different angle, saying that the record labels are to blame more than the music services which license albums and tracks from the labels. He likens arguing against Spotify to a complaint against the Sony Walkman in the 1980s. Bragg identifies label contracts as the problem. Many contractual terms were made for the analog era, he argues, and don’t carry over effectively to digital realities like music streaming. 

Bragg’s statement adds to an emerging aspect of the Spotify debate, which points the finger of complaint at how labels share streaming revenue with their artists. The argument hinges on whether Spotify streaming (and similar distribution deals) should be contractually accounted as royalty revenue, or licensing revenue. Generally in music contracts, royalties are much smaller percentages to the artist than licensing.

Last week, a union of Swedish musicians threatened to sue their labels over this issue. (RAIN coverage here.) 

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