The Spotify Effect

I love Spotify. I really do. It’s easy to use and convenient. It gives me a low impact way to explore a huge library of music. Because this exploration requires so little investment from me, I listen to a broader range of music than I ever have, and surprisingly, I like quite a bit of it!

Unlike the mass downloading days of yesteryear, the bands I listen to, even if only for a song or two, actually get paid. It’s not much, but it’s something.

The concept of downloading music never really offended my sensibilities. At the height of my downloading prowess, I paid to go every concert I could. My wardrobe consisted almost exclusively of band merch. The bands were still getting my money, the route was just far more direct than through album. The record industry, obviously, does not share my opinion. No, even as it was losing their dominance over your ear canals, the recording industry did everything they could to assert control of “their” content.

For this reason, Spotify scares me. It’s been pretty clear for a few years now that media companies want to suck as much money out of you as the possible. They don’t just want you to buy the music you listen to. They want you to buy a separate license for every device and context through which you consume their product.  

When illegal downloading was the easiest way to consume their product, there was very little the recording industry could do to force their will on the people. But that’s not the way things are anymore.

"If they don't like you, the recording industry will take you down."

 The industry has taken a two pronged approach to reasserting their dominance. The first prong is law enforcement. Instead of accosting individual citizens who downloaded a few songs, the industry has pushed the FBI to pursue the people and organizations that enable content sharing. It doesn’t matter if the organization publishes a service that can be used for legal, legitimate purposes. It doesn’t matter if an individual isn’t actually breaking laws in the country the operate in. If they don’t like you, the recording industry will take you down.

The second prong is partnerships with services like Spotify. Through these partnerships, the industry is making it really easy to listen to music, but on their terms. The potential upside for record labels is huge. They get paid, albeit a very small amount, each and every time you listen to a song. Compare this to selling a record. If you buy an album at your local FYE(do they exist anymore?) the record company gets paid once. I’d guess about half of the $12.99 you pay goes to the store. Probably about a dollar goes to the band. The rest goes to record labels, distributors, and all of the other cogs in the gears that make up the recording industry. With streaming services, the recording industry gets paid over and over again. Their costs are cut drastically because they do not have to create and ship a physical product. Half of the middle men are eliminated.

So why does Spotify scare me? Spotify and services like it are putting too much power back in the hands of a corrupt industry. It is consolidating power in the hands of fewer and fewer people.  

"What if they continue their march to industry dominance..."

If the recording industry suffers a fate similar to publishing or the movie industry, the consumer is screwed. Take a look at how Amazon is currently treating content providers like Warner Brothers and Hachette Publishing. Now, it seems that Amazon is behaving this way in order to maximize profits while keeping prices low, but what if they didn’t. What if they continue their march to industry dominance, become a natural monopoly, and start charging $100 per e-book? What if the opposite happens and no retailer has any real power? Then content distributors could charge as much as the wanted for access. Either way, the end result is not great for you and me.

I love Spotify. However I wonder if Spotify and other services like it will put an end to the democratization of the music industry that has happened over the past 20 years. At the very least, it has played a part in slowing the decentralized free flow of content that we saw a few years ago. A conspiracy theorist would probably say the trend has reversed. That we are already well on our way back to pre-napster levels of recording industry despotism.

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June 27, 2014 by Patrick Healy
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