Pinterest Stumbleupon Whatsapp
Ads by Google

A decade ago, Apple revolutionized the music industry with the iTunes Store. According to reports, Apple is now trying for another revolution with the rumored launch of Apple Music, a music streaming service based on the existing Beats Music BeatsMusic Launches Curated Mood-Based Streaming Music BeatsMusic Launches Curated Mood-Based Streaming Music The BeatsMusic music streaming app is launching on January 21st. BeatsMusic is a curated mood and genre-based player, so it's hoping to provide you with higher quality music for your dollars. Read More . But along the way, it might be trying to kill existing free music streaming services.

The State of Play

Right now, Spotify offers plenty of music for free Music Streaming With Spotify: What You Get For Free Music Streaming With Spotify: What You Get For Free The long awaited streaming music service, Spotify landed in the U.S. last week. Unlike other streaming services, however, Spotify offers an ad-supported free option, which makes millions of albums and songs available to you through... Read More through its streaming platform. It currently has 45 million free users and 15 million paid users. However, The Verge recently reported that Apple is getting music labels (which control which services the songs are streamed on) to stop supplying their songs to Spotify’s free listeners.

Since Apple is the biggest digital music powerhouse, it can use some strong-arming tactics. Of course, these aren’t fair and Apple is rightly being investigated for them. But we’re not lawyers so let’s leave that well alone.

The situation that we face as consumers is simple: Spotify’s free platform might be disappearing. How does that affect us? Why is Apple trying to kill free streaming? What impact will it have on piracy? And how is the future looking?

The Problem with Free Streaming

Apple-Killing-Spotify-Free-spotify-stock

Should music be free or should it have a price? As a consumer, I obviously want to get it for free, as long as doing so isn’t hurting anyone else. But that’s impossible, as the artist needs to get paid.

Ads by Google

The Internet made music piracy easier than ever before. Free music suddenly became available easier than ever before. And there is a perception that free streaming services are strengthening the idea that music should be free. There is some evidence to back this up too.

For her Honors Theses, Caitlin M. Seale of the University of Southern Mississippi surveyed college students to find out the impact of streaming services on their music consumption. She found that “those surveyed indicated that they believed that cloud-streaming services would reinforce consumer acceptance of music piracy since the service is free but with limited access.”

The same study also showed a decline in the amount of music pirated by those who use cloud-streaming services. However, it also led to a decline in CD sales and digital downloads.

Plus, iTunes sales for music downloads are declining iTunes Sales Are Declining – Is This the End of Paid Music Downloads? iTunes Sales Are Declining – Is This the End of Paid Music Downloads? Spotify is replacing iTunes for many users – will that tend continue? Read More . In a larger study, Mark Mulligan of MiDiA Research found that while streaming has opened up new markets, it has dented digital music downloads. “23% of music streamers used to buy more than one album a month but no longer do so. Download sales are affected most and will continue to feel the pinch with 45% of all music downloaders also music streamers.” The study indicates that by 2019, download revenues will decline by 39 percent.

Which is the biggest music download store in the world right now? Yup, you guessed it, iTunes. So, naturally, the above information is a problem for Apple. Yet, it too recognizes that streaming is the future of music and ownership is dead The End of Ownership: Netflix, Spotify, and The Streaming Generation The End of Ownership: Netflix, Spotify, and The Streaming Generation Read More . So it needs to monetize streaming as quickly as possible.

Streaming is the Future for Some Artists

Apple-Killing-Spotify-Free-taylor-swift

Apple’s woes aside, major artists have complained about Spotify’s free service many times, claiming it does not fairly compensate them. Perhaps the most famous of these is Taylor Swift’s article in the Wall Street Journal, after which she pulled her entire song catalog from Spotify.

Our own Harry Guinness thinks Taylor Swift is wrong about Spotify Why Taylor Swift Is Wrong About Spotify Why Taylor Swift Is Wrong About Spotify In the past week Taylor Swift has pulled her music from Spotify, inspired countless song-pun laden headlines and reignited the debate about streaming music services. Read More , but the base problem she cites finds several echoes in the music industry.

Take, for instance, songwriter Aloe Blacc’s article in Wired, which also called for streaming services to pay artists fairly. He said, “I believe policymakers will one day recognize that a system that allows digital streaming services to enjoy enormous profits while music creators struggle is imbalanced and broken.” It’s difficult to find fault in that logic.

The current system of payment for music labels and artists is deeply flawed, as Vox explains in a detailed piece. What it boils down to is this: The right people who can do something to fix the situation aren’t interested in fixing the situation.

However, that’s not a good enough reason either, according to Jeff Price, owner of indie label Spin, who says, “[Streaming services] whine to me about how hard it is to figure out who to pay. Why don’t you go be in a band and see how hard that is?”

It’s not just about Spotify either. Swift and other high-profile artists like Madonna, Rihanna, Daft Punk, and others joined Jay-Z’s new streaming platform, Tidal Why Jay Z's Tidal Music Streaming Service is Doomed to Fail Why Jay Z's Tidal Music Streaming Service is Doomed to Fail Jay Z recently relaunched Tidal, the music streaming service he acquired for $56 million. Tidal has 99 problems, and the pitch is one. Read More . However, Tidal has drawn criticism from other artists too, who claim it will lengthen the divide between big and small artists, and even drive up piracy again.

Lily Allen weighed in on Twitter:

Some smaller bands have accepted the new ecosystem, for better or worse. Nicole Miglis, singer of Hundred Waters, told Vox, “I fully support free music. I think it’s called stealing now, but I think that’s going to change in the future.”

Free vs. Paid Streaming

Apple-Killing-Spotify-Free-dollar

Reading the thoughts of industry analysts, major artists, indie artists, publishers, streaming services, download services, and more, one thing becomes clear: No one has a solution, everyone has a problem.

In a way, Taylor Swift is actually right when she called Spotify a “grand experiment” because that’s what it is at the moment. No one seems to have concrete data on whether free streaming or paid streaming is the future, and how it will impact the music industry.

As a consumer, I have used Spotify both as a free and a paid user. Spotify’s free tier is supported by ads, and the revenue is used to pay publishers and artists. It is definitely more convenient than even music piracy. However, the ads end up being quite annoying.

After using Spotify Free for a while, I decided to pay $10 a month to upgrade. I listen to music enough for that money to be worth the ad-free experience. More importantly, $10 was a good enough price to pay for Spotify’s convenience over music piracy. I knew the song I was listening to was legit, I knew I didn’t have to worry about malware or any malicious downloads, I knew it was always available whenever I wanted without fear of an illegal song being taken down, and I knew I wasn’t breaking the law by pirating music.

Pirates Will Always Find a Way

Apple-Killing-Spotify-Free-spotify-stock-speaker

The philosophy to battle music piracy differs. Some believe we need stronger laws and illegal download detection. Others believe it’s an economic problem and needs an economic solution. There are ideological extremes on both sides, like people who believe music should never be free and those who believe music should always be free. The only constant is that piracy has always existed and continues to exist.

Take, for example, a service like Netflix for streaming movies and TV shows. Yes, it is paid for and there are plenty of users paying for it. However, pirates come up with apps like Popcorn Time for free movie torrent streaming The Truth About Popcorn Time, And How To Torrent Safely The Truth About Popcorn Time, And How To Torrent Safely Read More .

History has shown that every time the music or movie industries think they have found a way to stop piracy, pirates have come up with a new way. As Forbes says, piracy won’t kill you and you can’t kill it either. Ergo, while Kazaa and Napster shut down, music piracy hasn’t stopped.

Piracy is a complex issue and it isn’t going to be solved by free or paid music streaming services. Yes, it will have an impact, but there is no telling yet what the impact will be.

In Defense of Spotify Free

Apple-Killing-Spotify-Free-spotify-gun

Currently, Spotify Free works as a gateway drug to make you shell out real money for the paid experience. However, Spotify itself says that 45 million users are sticking to free access while only 15 million are paying for the service. The conversion ratio needs to improve. That said, turning off Spotify Free might lead to even fewer conversions, not to mention we might see new avenues for piracy.

In fact, Netflix and other video streaming services offer a one month trial for free, which works as a gateway drug to get users hooked on the experience. Apple is rumored to be offering a similar trial period for Beats Music, and that might be what Spotify is eventually forced to do as well.

The strongest case to be made for Spotify Free is this. Warner Music Group, one of the major music labels, has said that streaming music revenue has surpassed music download revenue for the first time in its history, or the history of any of the other big labels.

Whether this is because of the freemium model or not can’t be proven without a deeper analysis. However, what Spotify is doing right now is actually translating into revenue for Warner. As it stands, Spotify is one of the biggest streaming services around and has 75 percent of users on the Free model. It would be surprising if a major chunk of Warner’s revenue didn’t come from those free users.

Let My Spotify Be Free

Apple-Killing-Spotify-Free-dre-cook

As someone who has made the journey from Spotify Free to Spotify Premium, I strongly feel that Apple’s attempts to covertly kill the free version would be detrimental to the music industry. Music is increasingly expected by many people to be free. To not offer an option for free music isn’t the progressive path, nor is it in the interest of either the artists or consumers.

If Apple can’t come up with a business plan that lets them give Apple Music away for free, that’s their problem. If the competition can offer music for free, let them. May the best person win. Apple already fears Spotify might be the end of iTunes Spotify Your Music Collection: The End Of iTunes Spotify Your Music Collection: The End Of iTunes Spotify is no longer content to just compete with radio, now they're competing with the idea of even owning music. Read More , so is it afraid Spotify will kill off its new music streaming service before it’s even got off the ground?

What do you think Apple should do? And will you stick with Spotify if it has to kill the free version? Remember, there are plenty of alternatives like Rdio Spotify vs. Rdio: A Complete Comparison Spotify vs. Rdio: A Complete Comparison I recently cancelled my Spotify Premium membership after a year of uninterrupted monthly payments to the company. This decision came about when I accidentally signed up for 14-days of free Rdio Unlimited. Quite frankly, I... Read More . Please let us know your thoughts on this issue in the comments section below.

Image Credits: endermasali / Shutterstock.com, Frank Gaertner / Shutterstock.com, jayofboy / Freeimages, Jon Aslund, royalshot / Freeimages

  1. kt
    May 18, 2015 at 2:50 pm

    Winners:
    Investors, the company itself, labels, and ad agencies.

    Losers:
    The artists and consumers.

  2. Vampie
    May 18, 2015 at 9:47 am

    I think the biggest problem are the music labels.
    They probably take a too big share of what comes in from the streaming services.
    (I have no clue, i'm not in the business, but as in other businesses, it's always the middle man/service that makes the most profit)

    Therefore we need more services like bandcamp (https://bandcamp.com).
    They let me pay directly to the artists, and I can steam from the site for free and from mobile phones (app) the music I bought.
    And I get to download the music as well. :)
    They do take 15% of the sale.

    • Mihir Patkar
      May 20, 2015 at 1:24 pm

      Bandcamp seems cool, Vampie, thanks for the recommendation! I'm unsure whether it's a sustainable long-term model. Music labels are the obvious "evil suits" in any such conversation, but well, music is a business so someone will always be an evil suit somewhere. If music labels were to die, I think we'd see services like this one end up donning the evil suit.

  3. Leah
    May 16, 2015 at 11:55 pm

    I hate Apple and it's for reasons like this.

    • Mihir Patkar
      May 20, 2015 at 1:22 pm

      I don't think Apple is alone in doing such deals, Leah. Every big corporation does shady deals like this and uses strong-arming tactics. That said, this is a good reason to hate a corporation :D

  4. Doc
    May 16, 2015 at 11:03 pm

    Yeah, artists don't make ANYTHING off merchandise, concert tickets, etc.
    Actually, music labels, producers and agents take most of it (just look at the TLC/Pebbles lawsuit)...but you get my drift.

    • Mihir Patkar
      May 20, 2015 at 1:21 pm

      No one is saying artists aren't making money. Artists need to make money, through whatever avenue they can. But just because they make money off merchandise/live shows does not give a consumer the right to say, "Make your music free to listen to!"

  5. www.teknikzon.se
    May 16, 2015 at 10:31 pm

    I say Spotify is currently the best service for music. Effective for record companies and artists who receive money. As well it that i tcounterproductive pirate download :)

    • Mihir Patkar
      May 20, 2015 at 1:19 pm

      Spotify is fantastic, I'd like to see it get some more competition. Just not something that muscles out its business models through deals behind closed doors, which is what Apple is allegedly doing according to the reports quoted above.

  6. Sam Jones
    May 16, 2015 at 2:23 am

    An interesting article and think you hit the nail on the head highlighting that all sides come to the table with their objections of the current model. I think the one issue I have with this and most pieces on this topic is that music streaming is not free by any stretch of the imagination. The music business is big business but nothing compared to the advertising industry and that is where I take the view as do many marketing and ad people that the consumer is paying through participation its just most people don't see that. Remember if it hasn't got a price YOU are the commodity!

    • Mihir Patkar
      May 20, 2015 at 1:18 pm

      Thanks for the compliment, Sam! I agree, it's not technically free, we are still paying for ads with our attention and/or time, which could be argued to be a more valuable commodity than actual dollars. But the question comes down to a matter of choice. If I want to choose to pay with my time/attention, I would like the option to do that. If I prefer to pay with dollars, I'd like the option to do that too. To each his own, why push for a flat "one-size-fits-all" solution?

    • Sam Jones
      May 20, 2015 at 9:44 pm

      Hi Mihir

      Have to say I think the problem is (coming from a marketing/advertising pov) is that businesses are questioning the value of advertising in a far more granular way and those adverts on free services are targeting those with a proven dislike for paying one could argue and is a hard to confirm audience type. I would also say that as a business guaranteed revenue through subscription is far more attractive and no ads is a lot easier to manage than the constant need to report and retain advertisers and get new ones - so I suspect it all comes down to a value judgement by Spotify. So if the cost of your time/attention is not worth as much or costs too much to maintain it is cut!

  7. Rick
    May 15, 2015 at 11:46 pm

    Regardless of how this plays out, I know one thing - I won't ever be using iTunes. I currently play most of my music with Google Play Music and my own songs I've uploaded. This is even how I manage the music on my old iPod Touch that I use in the car - no iTunes whatsoever. I do sometimes use the free versions of Spotify, Pandora, Slacker, Jango, Grooveshark (until it shut down only days ago), iHeart Radio, and a couple others to try and hear new to me music though - usually Spotify since you can search for and play a specific song at will.

    However, if that all goes away because of Apple, I will probably start using the paid service for Google Play since it integrates so nicely with the rest of my music, Android, and Chrome OS.

    • Mihir Patkar
      May 20, 2015 at 1:16 pm

      Thanks for responding, Rick! My bigger concern is about pricing. Let's say Google Play Music cost 20% more for an album than what the same album costs on iTunes. Or let's say there is some scenario where iTunes ends up being the cheapest paid option, and there are no free options that are worthwhile. Would you then consider switching to iTunes? Can iTunes win over an Android/Google user like you with better pricing?

    • Rick
      May 20, 2015 at 5:10 pm

      If I felt a strong need to stream new music even if I had to pay for it, and Google cost 20% more than iTunes as you suggested, I would quite likely still pick Google. If someone other than Google, like Spotify was competitive with iTunes, I would choose them over iTunes - even if they had a smaller library and fewer features. Basically, I do not want to stick even one toe into Apple's ecosystem if I have any other reasonable option.

      That said, if iTunes was the only affordable way to stream new music -AND they had a webapp as well as an unbloated Android app - AND (maybe they already do this?) if they allowed me to download the mp3 of any song I actually bought so I could listen to it with the app of my choice and NOT the iTunes application or an iPhone or iPod, as well as upload it to Google Play Music, then I might possibly consider using them. But I absolutely will not be forced into needing the iTunes desktop application and running Windows or Mac, or needing an i device. I know I said I have an iPod - but I don't need it to play my music and I don't use iTunes to manage it in any way. I could just as easily use my Android phone in the car for my music.

Leave a Reply

Your email address will not be published. Required fields are marked *