Spotify: Storming The Gate

Image Courtesy of "Battle Of The Dark Legion" Castle AgeLate last week sources close to Swedish based Spotify (the digital on-demand music collection which is available on desk tops and mobile applications in Austria, Belgium, Denmark, Finland, France, Germany, Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom and in the U.S.) announced that it intends to compete directly with the current internet radio King in the U.S. (Pandora) by developing a similar "Radio" style music offering. Spotify has already negotiated and currently has in place, direct licenses with the largest music labels in the world including Universal Music Group, EMI, Sony Music and Warner Music along with many other smaller labels. These deals afford Spotify's users the unlimited ability to choose individual songs by individual artists and play them instantly on demand. Spotify users have the choice of: Commercial free music on-demand for $9.99/mo. on mobile devices, $4.99/mo. on desk tops or a free version funded by advertisements.

Spotify (in its current form) allows its users to access millions upon millions of songs, which if listened to individually and in real-time succession would reportedly take over 80 years to complete. (Finally we now have the perfect challenge for all the malignant narcissists in our lives with their vociferous musical snobbery: "So you say you are the biggest music fan in the world? Prove it! Stifle your pie-hole and put these headphones on... I'll get back to you in 80 years... Windbag!) Spotify is continuing to add new songs at the rate of 10,000 per day or (if you will) an additional 21 days of constant music listening added daily. Spotify still has some notable hold-outs, namely The Beatles, Adele and most significantly for me AC/DC. The beauty of developing a radio style offering remains the simple fact that specific artist and label permissions are not required as the non-interactivity of radio falls under a statutory licence. This license allows Spotify to access music (including the music of the current hold-outs) and to a royalty structure similar to Pandora's which is presently negotiated and established by the Copyright Royalty Board. 

In recent weeks, Spotify's mobile app has passed Pandora, SiriusXM and IHeartRadio's mobile offerings in the iTunes App Store. I have been using the Pandora mobile app ever since the day I purchased the iPhone 3G in the summer of 2008. At the time, as I first began exploring all that the iPhone had to offer (natively), I would also visit the App store and search for third party music apps and discovered that Pandora was there in the #1 position on the "free" music-app section, and since it was free, I (along with millions of others) figured "what do I have to lose?" So I downloaded it and fired it up and was impressed with its simplicity and a bit concerned about "what its release would mean for my beloved SiriusXM." As of today, it hasn't meant very much, that is beyond influencing SiriusXM and many others to begin copying the personalized recommendation radio concept. The Pandora mobile app is very stable and it remains an easy and fun way to listen to the music that I enjoy, but more significantly, it has reintroduced me to similar sounding music that I haven't heard in many years and to cool new music that I have never heard before.

I check in weekly to the list of free music apps in the iPhone App store and occasionally Pandora's app will be temporarily unseated by the latest free music app, but Pandora has consistently reclaimed its top position within a few days. Even the SiriusXM mobile app briefly challenged Pandora when it was released one year later in the summer of 2009, but it too quickly sank into oblivion as subscribers swiftly realized that it left many meaningful SiriusXM offerings out of the mix and most notably Howard Stern, not to mention it was frustratingly unstable and it remained so for many years, that is until a recent series of updates which have suddenly been issued and are now measurably improving the mobile experience. While the app is still not perfect, SiriusXM is now showing signs of attentiveness and competency after many agonizing years of disrespectful arrogance and prideful negligence and are finally demonstrating that they are either willingly or forcibly responding to the voluminous pile of negative subscriber feedback by now moving in the right direction with their mobile offering.

So what does this all mean? If you are a music fan, there has never been a better time to be alive as music listening is improving and is being tailored on a constant basis to satisfy all listening preferences. For investors in SiriusXM, Pandora and Clear Channel, the competition to become the top worldwide one-stop shop for audio entertainment remains vigorous and is moving along at a healthy clip. It is becoming obvious to me that specializing in one style of audio entertainment presentation will no longer be a sustainable business plan. 5 years from now the ultimate victor in audio entertainment will be whichever business is quick enough and has enough funding to develop the technology and global licensing to offer everything to its users:

• Curated (Non-Interactive) music genre channels.
• Personalized music recommendation channels.
• On-Demand listening of all available music.
• International availability.
• Total user control (play, pause, fast-forward, rewind, skipping and offline music caching).
• Alternative access (Satellite, Radio Tower, Internet, Mobile and Integration on connected in-home technologies and appliances).
• Music alternatives (News, Sports, Talk, Comedy, Weather, Traffic).
• Choice of Paid Subscription packages and Free Ad-supported listening.
• Lyrics and other Liner note information.
• Integrated targeted Ticketing for Live performances and digital music purchasing.
• Vehicle "in-dash" integration.
• The highest quality audio.

And they're off! It is becoming a horse race where the odds-on American favorites like SiriusXM (who is visibly holding back on the reins) and Pandora (who has been mercilessly whipping its horse into a flat out gallop straight out of the gate) and Clear Channel (who appears to be stuck in the gate by choosing to run with a 300 pound jockey) can now only win by both flawlessly executing and by hoping the other horses stumble in the final 1/4 mile. The Swedish-bred dark horse Spotify looks to be positioning its black stallion to pass the field on the inside rail. Keep your eye on this one ladies and gentleman it will be riveting as it seems none of these horses are wearing blinders (although they all claim to be).