Apple Trash Talking Spotify As It Prepares Its Competitor

from the all's-fair-in-love-and-competing-with-steve-jobs dept

There's yet another rumor going around that Apple is getting ready to launch a subscription music service. That's been rumored for ages, and it would be surprising if the company didn't do it. In fact, many were surprised that after Apple shut down music locker Lala that it didn't immediately launch a cloud based subscription offering. But, perhaps more interesting, is the fact that Apple has also been spending time trash-talking Spotify to music industry execs. We had mentioned, when Apple shut down Lala, that it would be a good time for Spotify to figure out how to launch in the US. The company has been trying for quite some time now, and the record label demands are basically impossible to meet. And it sounds like Apple is encouraging that. As Greg Sandoval reports:
In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify's business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.

But Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it's tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.
Ah, the amazing ridiculousness of confused short-term thinking. While I also have questions about Spotify's ability to generate significant revenues long-term, the recording industry is making a huge mistake if it buys into the idea that Spotify is likely to cannibalize digital sales. If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading. Yes, there are a bunch of reports that suggest Spotify gets people away from The Pirate Bay and into a system that at least gets the labels some money.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Oct 8th, 2010 @ 2:59pm

    Spoti--who?

    I did some research and Apple's option is much, much better than the Microsoft option.

    But I'm confused. Is spotify an Android program?

     

    reply to this | link to this | view in thread ]

  2.  
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    PaulT (profile), Oct 8th, 2010 @ 3:25pm

    "They noted that it's tough to sell something that someone else is giving away, the sources said."

    Erm, isn't that exactly what Apple's been doing since they launched iTunes? Weird how they forget that particular narrative when it suits them, yet it's been the industry's mantra of how iTunes and the like would never work.

    "If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading."

    You mean that people who don't want to pay 99p/track will actually use a legal service if it's more reasonably priced? Shocking.

    I also can't help but notice that the complaints seem to focus on the "free" part of Spotify without mentioning that there's actually a 3 tiered subscription model with various extra benefits to encourage payment (such as the ability to store playlists on your mobile phone while offline with the premium service). The free service only gives you 20 hours/month.

     

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  3.  
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    iamtheky (profile), Oct 8th, 2010 @ 3:40pm

    Apple would also say your blog sucks compared to their blog, and your server sucks while theirs is totally better.

     

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  4.  
    identicon
    Anonymous Coward, Oct 8th, 2010 @ 4:21pm

    It's real unfortunate that Spotify is not available in the US

    But maybe that Windows Phone Mobile 2012 that comes out will next July will support it.

     

    reply to this | link to this | view in thread ]

  5.  
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    Anonymous Coward, Oct 8th, 2010 @ 4:59pm

    Who cares the Droid invasion already started.

     

    reply to this | link to this | view in thread ]

  6.  
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    Jay (profile), Oct 8th, 2010 @ 9:48pm

    There's a reason I like Grooveshark right now. Fact is, I can upload music quite easily and listen to it whenever I want.

    What's the good thing on Spotify that everyone continues to talk about it?

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Simon Chamberlain, Oct 9th, 2010 @ 2:33am

    Re: Spoti--who?

    Streaming music service, started in Sweden, now the biggest in Europe. Free version is ad-supported, subscription version has higher-quality streams and can be used on your phone. Different from Pandora in that you can choose what tunes you want to listen to (rather than setting up a radio station, though you can do that to).

    Anecdotally, I agree with the last paragraph. I basically never download music now. I don't need to, I can get pretty much anything I want through Spotify.

     

    reply to this | link to this | view in thread ]

  8.  
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    The Infamous Joe (profile), Oct 9th, 2010 @ 3:33pm

    Re:

    Since you asked, I have actually tried quite a few of the only streaming services (at the very least, their free trials!)

    I liked Grooveshark's price ($3 month for VIP) but I listen to music 80% of the time on my Droid (hence why I paid for VIP) but was VERY upset when I realized that only some songs were available over 3G (e.g., some required wifi.) Now, I couldn't find this info anywhere on Grooveshark's site, or on the android app's page- though I did find mention of it in the user comments. I can't come up with a logical reason that some songs were 3G enabled and other weren't, but I canceled my subscription within 30 minutes of discovering it. Also, Grooveshark's selection is.. well, messy.

    I eventually settled on Mog.com-- their android app is closer to beta than I'd like, but the selection is good. The $10/mo price point is pushing it, though. ($5/mo if you don't want phone use)

    I fully plan on trying Spotify when (if?) it is released in the US.

    Oh, and how did Mog.com change my music habits? I no longer pirate music, as there's no need to. I only ever listen to music on my phone or on my computer, both places I just use Mog.

     

    reply to this | link to this | view in thread ]

  9.  
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    Daniel (profile), Oct 29th, 2010 @ 4:45am

    Since when were Apple an independant source for good advice? Apple advises music industry to wait till it has it's own offering (and can therefore cream more cash from fanbois), nothing new about that.

     

    reply to this | link to this | view in thread ]


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