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Spotify reportedly number two revenue source for record labels, still far behind iTunes

post #1 of 38
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On-demand free and subscription-based music streamer Spotify is now reportedly the second largest source of revenue for the world's major record labels but lags far behind Apple's market-dominating iTunes.

The claims, which have not been independently confirmed, come from a source close to the company who notes that even at number two, Spotify has a huge gap to overcome to reach a level of success enjoyed by iTunes, reports Business Insider.

According to Business Insider Intelligence iTunes paid out an estimated $3.2 billion to music publishers in 2011 which is in line with the numbers given out during the company's quarterly conference calls. Apple's second quarter 2012 was

A report in 2010 suggested that Apple was in talks to
buy Spotify, but the rumor ultimately bore no fruit.

Spotify was founded in 2006 and became a popular service in Europe before crossing the pond to launch in the U.S. in July 2011 with the slogan "any track, any time, anywhere." At the time the company had a catalog of 15 million songs but that number has swelled to 18 million and grows by about 10,000 to 20,000 tracks per day.

Recent estimates from analytics firm AppData found that about 23 million people used Spotify last month. During the D10 conference in May, Spotify founder and CEO Daniel Ek said that there are about 10 million users in the U.S. alone, over 3 million of whom are paying subscribers.

Also at D10 Spotify Director, Napster co-founder and former Facebook president Sean Parker alleged that Apple attempted to keep the service out of the U.S. as it directly competes with iTunes.

"If we [Spotify] continue growing at our current rate in terms of subscriptions and downloads, we?ll overtake iTunes in terms of contributions to the recorded music business in under two years," Parker said at SXSW.

Spotify
Spotify's new Radio feature grants Free users access to mobile music streaming. | Source: Spotify


There are three tiers in Spotify's payment structure: Free, which includes limited ad-supported music listening; Unlimited, which plays tracks ad-free for $4.99 a month; and the $9.99 Premium that allows customers to stream to smartphones and save tracks for offline listening. A new radio feature much like Pandora was introduced alongside the latest update to the Spotify iOS app in June and removes the mobile listening ban for Free level users.

The music startup continues to grow and is looking to raise $220 million at a $4 billion valuation for 2012 following last year's $100 million at a $1 billion valuation.
post #2 of 38

I think this is not quite what musicians mean when they say, “You know what revenue I make from Spotify? A bunch of number two!”

post #3 of 38

Spotify is great. I have a free account and listen to it non-stop at work every day. Sound quality is way better than XM in the car. I believe the free streams are supposed to be lower quality than the paid people get, but I've been very happy. The radio feature works well, too. I get songs that are generally close to the band I've chosen and it's a good way to discover new music.

 

+1.

 

- Jasen.

post #4 of 38
Is there a limit to how many songs one can purchase? Buying more than 10 songs a month will make .it. Sounds like Spotify like Amazon "has it all wrong"
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post #5 of 38
Quote:
Originally Posted by jasenj1 View Post

Spotify is great. I have a free account and listen to it non-stop at work every day. Sound quality is way better than XM in the car. I believe the free streams are supposed to be lower quality than the paid people get, but I've been very happy. The radio feature works well, too. I get songs that are generally close to the band I've chosen and it's a good way to discover new music.

 

+1.

 

- Jasen.

How much data would this burn in the course of a day?

post #6 of 38

Yeah as a musician I don't think anyone realizes how far. I get about 10 cents a month from spotify. itunes anywhere from $25-300. 

post #7 of 38

Here's hoping Spotify continues to grow and do well. I love the service too as it's a great compliment to iTunes. I also hope that Apple feels the heat from Spotify and looks into working out some kind of streaming service with the labels.

 

Apple's movie and music catalogue has gotten so good that I'd be fine paying a reasonable monthly fee to have all-you-can-eat subscription access to everything in the iTunes store.

post #8 of 38
I've don't use Spotify but I hear great things from others who swear buy it.

If is interesting that it, not Google or Amazon's attempt at selling music, is the 2nd source for revenue after the iTunes Store.

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post #9 of 38

From a consumer's point of view, it's a great service. However, we're starting to see more and more competitors to it.

 

Hopefully Spotify can convert an increasing number of users to their premium service. That's when artists will start seeing a decent return.

post #10 of 38
Quote:
On-demand free and subscription-based music streamer Spotify is now reportedly the second largest source of revenue for the world's major record labels but lags far behind Apple's market-dominating iTunes.
The claims, which have not been independently confirmed, come from a source close to the company who notes that even at number two, Spotify has a huge gap to overcome to reach a level of success enjoyed by iTunes, reports Business Insider.
According to Business Insider Intelligence iTunes paid out an estimated $3.2 billion to music publishers in 2011 which is in line with the numbers given out during the company's quarterly conference calls. Apple's second quarter 2012 was unusually profitable and saw almost $1.9 billion in profit from iTunes, nearly double from the year ago period.
"iTunes is way up here," the source said with a raised hand, "and everyone else is way down here."

Wrong. Globally, physical media sales are still much larger than iTunes, making Spotify a distant third.

Industry revenues for physical media were $7.5 B last year globally.
http://www.grabstats.com/statmain.asp?StatID=78

iTunes might eventually pass physical sales, but we're not there yet. And it is unlikely that Spotify will pass physical sales for a long, long time (if ever).
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post #11 of 38
Spotify only makes sense for the major labels that have an ownership stake, and get an undisclosed percentage. The revenue for non label artists is close to nil. .oo something cents per play. An independent musician friend pays her mortgage through iTunes sales but says she gets almost nothing from Spotify, despite tons of plays. So if you support Spotify, you,re not supporting independent musicians, just perpetuating the labels dominance. Let's hope Apple wins this one, for music's sake.
post #12 of 38
Quote:
Originally Posted by Jeffr1 View Post

Spotify only makes sense for the major labels that have an ownership stake, and get an undisclosed percentage. The revenue for non label artists is close to nil. .oo something cents per play. An independent musician friend pays her mortgage through iTunes sales but says she gets almost nothing from Spotify, despite tons of plays. So if you support Spotify, you,re not supporting independent musicians, just perpetuating the labels dominance. Let's hope Apple wins this one, for music's sake.

Spotify makes complete sense to me as a consumer. Someone is getting $120 a year from me for a service I want and enjoy. Behind that $120 is none of my business. I don't give a shit about how much the foxconn employee gets paid to make my iPhone. What's the difference?

post #13 of 38
Quote:
Originally Posted by toysandme View Post

How much data would this burn in the course of a day?

probably 150MB per day, but if you have a paid account you can download music to your iphone and not use any data. same with slacker.

 

great for those of us who take the subway to work 

post #14 of 38
Quote:
Originally Posted by Jeffr1 View Post

Spotify only makes sense for the major labels that have an ownership stake, and get an undisclosed percentage. The revenue for non label artists is close to nil. .oo something cents per play. An independent musician friend pays her mortgage through iTunes sales but says she gets almost nothing from Spotify, despite tons of plays. So if you support Spotify, you,re not supporting independent musicians, just perpetuating the labels dominance. Let's hope Apple wins this one, for music's sake.

tell your friend to start playing live all the time. if i have to go to work every day what's wrong with others doing the same?

 

honestly there is too much music out there. i still haven't listened to a lot of good stuff from the 60's and 70's that i want to listen to. its too expensive to buy all this music a la carte like itunes sells it. that's why i love spotify

post #15 of 38
Quote:
Originally Posted by toysandme View Post

How much data would this burn in the course of a day?

I have no idea. I listen on a wired network. I haven't tried the phone app. I'm a desk jockey.

 

- Jasen.

post #16 of 38

I love Spotify it is awesome. I am a paid subscriber. On the other hand, itunes gets zero dollars a month from me. lol.gif

post #17 of 38

 

Quote:
Originally Posted by faZZter View Post

I love Spotify it is awesome. I am a paid subscriber. On the other hand, itunes gets zero dollars a month from me. lol.gif

 

Quote:

Originally Posted by MeniThings View Post

Here's hoping Spotify continues to grow and do well. I love the service too as it's a great compliment to iTunes. I also hope that Apple feels the heat from Spotify and looks into working out some kind of streaming service with the labels.

 

Apple's movie and music catalogue has gotten so good that I'd be fine paying a reasonable monthly fee to have all-you-can-eat subscription access to everything in the iTunes store.


I am baffled that Apple has not come out with any content subscription packages to try and blunt Netflix, Hulu, Amazon Prime, Spotify, Pandora, etc., from taking away iTunes Store purchases.

post #18 of 38
Quote:
Originally Posted by Porchland View Post

I am baffled that Apple has not come out with any content subscription packages to try and blunt Netflix, Hulu, Amazon Prime, Spotify, Pandora, etc., from taking away iTunes Store purchases.

Maybe Apple believes in people actually owning their content.

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post #19 of 38
Quote:
Originally Posted by Tallest Skil View Post


Maybe Apple believes in people actually owning their content.

 

Apple cares about innovation and profits.  I doubt that the people at the iTunes Store division are making business decisions about how to license media content based on whether they're carrying the torch for "people actually owning their content."

 

(And it's all licensed; you don't own any of the content.  Some licenses are just more permissive than others.  Read your terms and conditions the next time you update iTunes.)

post #20 of 38
Quote:
Originally Posted by Tallest Skil View Post

Maybe Apple believes in people actually owning their content.

You don't own the content even when you get it from Apple. You license it.

For many purposes, it's almost as if you owned it, but you can't, for example, make copies like you could if you owned it.
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post #21 of 38
Quote:
Originally Posted by jragosta View Post

You don't own the content even when you get it from Apple. You license it.

File's on my machine. I own it.
Quote:
For many purposes, it's almost as if you owned it, but you can't, for example, make copies like you could if you owned it.

Of course you can. iTunes even lets you do that itself.

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post #22 of 38
Quote:
Originally Posted by Tallest Skil View Post


Of course you can. iTunes even lets you do that itself.

 

iTunes Store Terms and Conditions:

 

Quote:
You agree that the iTunes Service and certain iTunes Products include security technology that limits your use of iTunes Products and that, whether or not iTunes Products are limited by security technology, you shall use iTunes Products in compliance with the applicable usage rules established by Apple and its licensors (“Usage Rules”), and that any other use of the iTunes Products may constitute a copyright infringement. Any security technology is an inseparable part of the iTunes Products. Apple reserves the right to modify the Usage Rules at any time. You agree not to violate, circumvent, reverse-engineer, decompile, disassemble, or otherwise tamper with any of the security technology related to such Usage Rules for any reason—or to attempt or assist another person to do so. Usage Rules may be controlled and monitored by Apple for compliance purposes, and Apple reserves the right to enforce the Usage Rules without notice to you.

 

Things you can't do with stuff that you "own":

 

Quote:

USAGE RULES

(i) You shall be authorized to use iTunes Products only for personal, noncommercial use.

(ii) You shall be authorized to use iTunes Products on five iTunes-authorized devices at any time, except for Content Rentals (see below).

(iii) You shall be able to store iTunes Products from up to five different Accounts at a time on compatible devices, provided that each iPhone may sync tone iTunes Products with only a single iTunes-authorized device at a time, and syncing an iPhone with a different iTunes-authorized device will cause tone iTunes Products stored on that iPhone to be erased.

(iv) You shall be authorized to burn an audio playlist up to seven times.

(v) You shall not be entitled to burn video iTunes Products or tone iTunes Products.

(vi) iTunes Plus Products do not contain security technology that limits your usage of such products, and Usage Rules (ii) – (v) do not apply to iTunes Plus Products. You may copy, store, and burn iTunes Plus Products as reasonably necessary for personal, noncommercial use.

(vii) You shall be able to manually sync a movie from at least one iTunes-authorized device to devices that have manual sync mode, provided that the movie is associated with an Account on the primary iTunes-authorized device, where the primary iTunes-authorized device is the one that was first synced with the device or the one that you subsequently designate as primary using iTunes.

(viii) An HDCP connection is required to view content transmitted over HDMI.

(ix) Content Rentals

(a) Content rentals are viewable on only one device at a time. You must be connected to the iTunes Service when moving rentals, and you may do so only between your computer and other compatible devices. Content rented using your Apple TV, iPad, iPhone 4, or iPod touch (4th generation) may not be moved. If you move a rental to a compatible device and then use the iTunes Service to restore that device, or choose Settings > Reset > Erase all content and settings on that device, the rental will be permanently deleted.

(b) You have thirty (30) days after downloading a rental to begin viewing. Once you begin viewing, you have twenty-four (24) hours to finish viewing a movie. Stopping, pausing, or restarting a rental does not extend the available time for viewing.

Some iTunes Products, including but not limited to Content rentals, may be downloaded only once and cannot be replaced if lost for any reason. It is your responsibility not to lose, destroy, or damage iTunes Products once downloaded, and you may wish to back them up.

The delivery of iTunes Products does not transfer to you any commercial or promotional use rights in the iTunes Products. Any burning or exporting capabilities are solely an accommodation to you and shall not constitute a grant, waiver, or other limitation of any rights of the copyright owners in any content embodied in any iTunes Product.

You acknowledge that, because some aspects of the iTunes Service, iTunes Products, and administration of the Usage Rules entails the ongoing involvement of Apple, if Apple changes any part of or discontinues the iTunes Service, which Apple may do at its election, you may not be able to use iTunes Products to the same extent as prior to such change or discontinuation, and that Apple shall have no liability to you in such case.

post #23 of 38
Quote:
Originally Posted by Porchland View Post

You may copy, store, and burn iTunes Plus Products as reasonably necessary for personal, noncommercial use.

Thanks for combing that to prove my point!

Additionally, point five is only for the playback thereof. You can make copies for the purpose of backup.

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post #24 of 38
Quote:
Originally Posted by Tallest Skil View Post

File's on my machine. I own it.

Technically, you own only the hard disk or other media. You do not own the content. Read the iTunes license.
Quote:
Originally Posted by Tallest Skil View Post

Of course you can. iTunes even lets you do that itself.

Wrong. I specifically stated that you couldn't 'make copies like you could if you owned it.'

You can make copies for backup purposes - and that's it.

If you owned it, you could make a million copies and distribute them to anyone you wished. Thus, you are not able to make copies like you could if you own it as I said.
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post #25 of 38
Quote:
Originally Posted by jragosta View Post

Wrong. I specifically stated that you couldn't 'make copies like you could if you owned it.' You can make copies for backup purposes - and that's it. If you owned it, you could make a million copies and distribute them to anyone you wished. Thus, you are not able to make copies like you could if you own it as I said.

If you want to be entirely accurate, you can do just that. I'm simply talking about legally. I don't believe you can make legal (viewable) backups of any other video media, either.

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post #26 of 38

"File's on my machine. I own it." - Tallest Skil

 

You seriously believe that's all it takes to own digital media?

 

lol.giflol.giflol.gif

post #27 of 38
Quote:
Originally Posted by jasenj1 View Post

Spotify is great. I have a free account and listen to it non-stop at work every day. Sound quality is way better than XM in the car. I believe the free streams are supposed to be lower quality than the paid people get, but I've been very happy. The radio feature works well, too. I get songs that are generally close to the band I've chosen and it's a good way to discover new music.

 

+1.

 

- Jasen.

The free account in Australia is useless, you can't stream anything except from a PC over wifi.

 

They don't even accept iTunes cards (which I buy at a discount) for payment of $12 a month here.

 

There is no way to delete your account, their support has to do it, although they were fairly prompt with my request.

 

I just stick with radio streaming Apps, particularly Triple J Unearthed.

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post #28 of 38
Quote:
Originally Posted by Porchland View Post


I am baffled that Apple has not come out with any content subscription packages to try and blunt Netflix, Hulu, Amazon Prime, Spotify, Pandora, etc., from taking away iTunes Store purchases.

 

I think it comes more from the content providers side, with them refusing Apple streaming licenses, due to their fear of being too locked in to iTunes as the number one provider of content.

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post #29 of 38

a single backup copy is what I know as well as being legal in terms of recording or burning content from these platforms. i sometimes record tracks that I really like from spotify. is that in order? there is this soft called tunebite which records from the sound card and if I find a song that I really like I wanna be able to play it whenever so I record it and then export it to my player. as long as i don't sell these copies or whatever, it should be legal, right? I know I was also a little bit worried but everywhere I looked for more info, this is the response I got.
 

post #30 of 38

I love Spotify. I think its business model is better consumer-wise than iTunes Store's one.

 

It is much better to buy streaming rights to all songs at once as a monthly subscription than to purchase each song/album separately (iTunes Store) and only to have them available  on up to 5 PC - DRM-enabled tracks are just too restrictive.

post #31 of 38
Originally Posted by rangerBoar View Post

DRM-enabled tracks are just too restrictive.

 

Except they're not DRM-restricted.

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post #32 of 38

Here's a survey that caught me by surprise regarding iTunes and music listening in general.

 

http://techcrunch.com/2012/08/14/youtube-is-for-music/

 

According to Nielsen’s latest “Music 360 ” report, 48% of consumers in the U.S. still see radio as the dominant way to discover new music. For almost two-thirds of U.S. teenagers, however, Google’s YouTube is now a more important source of music than radio (54%), iTunes (53%) and CDs (50%).

Despite the growing popularity of Internet music services among teens, about a third of them still bought a CD in the last year and among all respondents, 55% said physical CDs are still a very or fairly good value.

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post #33 of 38
Quote:
Originally Posted by Gatorguy View Post

Here's a survey that caught me by surprise regarding iTunes and music listening in general.

http://techcrunch.com/2012/08/14/youtube-is-for-music/

According to Nielsen’s latest “Music 360 ” report, 48% of consumers in the U.S. still see radio as the dominant way to discover new music. For almost two-thirds of U.S. teenagers, however, Google’s YouTube is now a more important source of music than radio (54%), iTunes (53%) and CDs (50%).



Despite the growing popularity of Internet music services among teens, about a third of them still bought a CD in the last year and among all respondents, 55% said physical CDs are still a very or fairly good value.



I'm probably about half way between a teenager and an Applebaum yet I find most new music through YouTube. Sometimes I'm sent a link, other times it's being promotes by Vevo when I'm listening/watching another artist's song, and sometimes it catches my eyes when being shown on the right in a thumbnail.

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post #34 of 38
Quote:
Originally Posted by Tallest Skil View Post


File's on my machine. I own it.

 

If you own it, then you can also sell it, correct? I own an apartment building and I can sell it whenever and to whomever I want - in fact, it's for sale right now. Try that with those files you have on your machine, that you *think* that you own, and let us know how that turns out. I know several excellent attorneys. After you get that "knock at the door", just send me a PM and I'll forward their numbers to you. Oh, and the "I didn't know" defense tends not to be the best strategy when standing before a judge. lol.gif

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post #35 of 38
Originally Posted by Jag_Warrior View Post
If you own it, then you can also sell it, correct?

 

I don't see why not.

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post #36 of 38
Quote:
Originally Posted by Tallest Skil View Post

 

I don't see why not.


Right. So give it the old smell test. Click this http://www.Ebay.com and list *your* song files for sale, either individually or as a package. Do let me know how that works out. And if you know of anyone looking for a 6 unit garden style apartment building, please send them my way. I actually have a deed of ownership to what I'm selling though. ;)

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post #37 of 38
Originally Posted by Jag_Warrior View Post
I actually have a deed of ownership to what I'm selling though. ;)

 

I also have proof of ownership. I fail to see the issue here. It's on me to not use the files once I've sold them away, just as it's on me to not steal my car back if I sell it to someone else, seeing as I quite probably have a spare key for it.

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post #38 of 38
Quote:
Originally Posted by Tallest Skil View Post

 

I also have proof of ownership. I fail to see the issue here. It's on me to not use the files once I've sold them away, just as it's on me to not steal my car back if I sell it to someone else, seeing as I quite probably have a spare key for it.


Yes, if you do indeed own it, you should be able to sell it, lease it or even give it away. But it's not me that you'll have to convince if you proceed with a sale of these digital files. Like I said, just go to Ebay, Amazon or your site of choice and put them up for sale. But keep a daily blog so that we can all follow your plight (from a safe distance).

 

There's a guy who had something to do with a site called Nappy or Nipster or Napster... something like that. He might know a dude who knows a dude who'll be able to help you out.

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