Attention! Monetizing Spotify Apps Is The Same As Monetizing Music

from the now-that-I-have-your-attention... dept

Recently Spotify launched its app platform, a significant step into a future where music licensing can function like an API. Which of course should have been made possible a long time ago, but corporations’ loss of control was preventing that until they finally found a way to out-leverage the indies – or maybe that’s just a coincidence.

So recently we’ve been seeing a phenomenon I like to call the Rage Against The Stream, where artists & labels have been pulling their content from services like the aforementioned. I probably don’t have to point out that in a reality where everyone is competing with free, attention has become more scarce and valuable than ever before and thus the categorical dismissal of access models such as subscription services is unlikely to pay off in the long run (p.s. I love understatements).

The day after Spotify launched its platform, articles started popping up, commenting on the fact that it’s impossible to ‘monetize apps’ and there thus being “no clear upside to developers.” And that’s where I grab my BS-defense-stick and start drawing the line.

No, you can’t put ads in your app.
No, you can’t charge for the app or create in-app purchases.
No, Spotify doesn’t give you part of the revenue of music streamed through your app.

It’s the same lack of creativity of coming up with innovative business models that can be seen in other parts of the music industry… what’s new is that this time it’s coming from the tech side. What it comes down to is the same as competing with free – and saying you can’t compete with free is saying you can’t compete period.

Want to make money by building a Spotify app? Build one that uses Facebook Connect for user registration, focus on building a great experience that’s non-obtrusive, make it easy to share this experience and funnel that back to your main platform (that’s outside Spotify) – focus on discovery and then sell the premium. The SongKick app is a good example, but it can be applied in many more ways. Since it’s going to be primarily power users and music geeks using the apps for now, items like vinyl copies come to mind. Focus on gaining & holding the attention – which is scarce, then build your way towards monetization by doing something that Spotify is not.

Spotify Apps are highly monetizable, you just have to be creative. Just like with music.

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Comments on “Attention! Monetizing Spotify Apps Is The Same As Monetizing Music”

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fogbugzd (profile) says:

I am not surprised so many people are upset about the Spotify API. You have to accept that you are not involved in a zero-sum game. You also have to be willing to accept that other people are making money, perhaps more money than you are. That runs counter to management-thing in most large corporations. Couple that with the fact that you have to think beyond “let’s put ads on it” for your revenue model, and it is no wonder the traditionalists are complaining.

Anonymous Coward says:

Re: Re:

other people are making money, perhaps more money than you are.

Just like the existing record labels and artists.

Record labels know they’re fucking the artists. Artists know they’re getting fucked.

The record companies have conditioned themselves to believe that if they’re not the ones doing the fucking, they’re the ones getting fucked. That’s why they’re fighting new business models so hard.

Anonymous Coward says:

Those are all open source games, that anybody could use to create a little platform and put a button in there “buy this song”, there are dozens of apps for the Android and iPhone also, but that is too much to ask it is easier to threat others than it is to actually work for something.

PaulT (profile) says:

Re: Re:

I never get this argument…

Of course, there needs to be filters for people to use. With or without the old models, there’s too much music for any individual to listen to. The important part is that these are chosen by the consumer and not by the same corporates who are running the major labels.

Look at the beta for Spotify. Here, we have a wide range of filters ranging from established publications such as The Guardian and Rolling Stone, existing engines that suggest music based on what you already like (Moodagent,, fully independent focussed sites such as Pitchfork and We Are The Hunted, and even apps geared solely toward driving live gigs.

Are you really saying that this is analogous in any way to Clearchannel-controlled generic radio stations and corporate TV? I don’t see it. Everything here seems to be driven toward an individual experience, not the unit-shifting homogeneous mainstream experience of the “old model”. Even if the majors started buying these organisations up, it’s hard to see how they could leverage them all toward their product without killing at least some of their usefulness.

gaetano says:

Re: Re: Re:

I see your argument, but as of right now these are a select few brands that are funneling users through the site.

At the moment, this resembles a clique.

It’s Spotify, Facebook, labels, and these few media outlets working in concert vying for our attention, data, and trends. There’s value in it in different places for different players.

Are there a few apps thrown in there that are a bit ancillary? (IE Lyrics and gigs) Yes, but let’s see where they go with this, I’m convinced that the greatest value a label could get from Spotify is it’s relationship with Facebook, and the potential marketing beta that could come from it. I’m not sure the logistics or legality of something like this, but neither party has always been that big on transparency..

To me that’s the old model, just spun a bit differently. Everyone scratches each other’s backs, everyone gets a taste, the public is none the wiser…and with a population as tech and media hungry as us right now, I doubt most will think twice.

I would love to be more optimistic, just have been in the music buisiness for too long to be less pragmatic.

PaulT (profile) says:

Re: Re: Re: Re:

OK, I still see your point, but I think you’re confusing a few things here potentially.

First of all, the apps and Facebook are (to the best of my knowledge) separate things. The Facebook partnership is a way of increasing exposure for the service – and it seems to be working extremely well from recent figures. I know for a fact that my personal list of friends on the service listed via Facebook has jumped from 3-4 to over 15 in the short time that Facebook’s been involved. Facebook’s main purpose for a company is advertising, and they have delivered that in spades.

As for the apps, they’re still technically in beta so of course there’s a “select few brands”. Nobody else has had a chance to create their apps, which is natural in a beta phase. Bear in mind that pre-Facebook, Spotify didn’t have any open partnerships beyond necessary licencing deals with the majors , as least AFAIK. That’s annoying but sadly vital for new businesses to break mainstream in the current market – the number of people who would just go “no Lady Gaga so it sucks” and ignore it is depressing.

I understand suspicion and pessimism about any music venture, given the industry’s history. Give it 6 months post-beta and see where the service has gone. I doubt that there will still be any sort of “clique” beyond he superficiality of already established brands being more popular than newer players, but we will see.

I’m simply more optimistic because tastes and alternative music can be shared much more easily and directly than in the old model. This (hopefully) makes it much more difficult to control and place artificial limitations upon. If it becomes accepted that you lose money by not being on Spotify, and users still retain their current level of freedom, that can only be a good thing for the consumer.

Hephaestus (profile) says:

Re: Re: Re:

“Even if the majors started buying these organisations up, it’s hard to see how they could leverage them all toward their product without killing at least some of their usefulness.”

They cannot and that is the one point of PIPA and SOPA, to be able to squash any future competition. They are losing market share to non RIAA music. The standard advertising model they use doesn’t work on the web. Music targeted at your personal preferences is the way things are heading, not music forced down your throat from every available TV and radio speaker.

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