Spotify No Longer Just Music

When we look at the future of on demand and streamed media services the clue is in the word media. We are no longer shackled to thinking of vertical movie, music, games but media hubs that satisfy all under one subscription.

To bring the point firmly home Spotify has announced it is adding more non-music content to its app. The expanded service will include radio podcasts, news bulletins, video clips and moves their 60 million regular users which span some into a media one stop shop and they also have introduced a new running mode that matches music to the pace of the listener which is based on feedback from their smartphone's built-in sensors.

The news comes on the same day that The Verge disclosed the details of Sony’s Spotify contract and raised questions of whether the model worked in the best interest of the production companies, or the artists. The move is also intended to protect Spotify from competitive threats from Apple’s planned streaming service and YouTube’s expansion moves.

Spotify’s content partners include the BBC, TED, the science-tech talks organiser, Disney, Vice Media, comedy podcast The Nerdist and clips from Amy Poehler’s Smart Girls video channel. They will mix musicians and cooks in a show called Turntable.  

What is clear is that Spotify has a vision past music and one which if successful will help protect it from the new Spotify can provide music that matches a runner's pace.

The big question is whether Spotify’s 15 premium subscribers want and will use the extra services today and allow Spotify to float their service on the stock market.

Asda / HMV Is It Wise.Com?

Today we read that Asda, the UK arm of Walmart, is ‘considering’ a bid for UK entertainment retail casualty HMV. Administrators Deloitte have already almost halved the number of HMV stores leaving it with some 116 outlets and the deal may be attractive given Walmart’s own position in the same market in the US.

It is an interesting rumour given that their two biggest UK supermarket rivals have clearly pinned their money on going after the growing online media marketplace. It also comes on the back of the news that Argos is reintroducing CDs and DVDs into selective stores. The CD and DVD is clearly becoming transient technology and not one to invest in today unless you see a quick buck in ‘stacking them high and selling them cheap.’

Last year Sainsbury acquired the flagging Anobii ebook service, rebranded it and now are pushing it hard to their customer-base .  It may not give them a comprehensive online media offer but it starts to plug the gap.

Tesco,  now the third largest retailer in the world, have made their online intent clear by hiring Gavin Sathianathan, Facebook’s EMEA head of retail for Europe and Mark Bennett, a former EMI and Warner Music executive who headed up Sainsbury’s digital entertainment unit. In 2011, Tesco bought an 80% stake in the Blinkbox which gave them a competitive position against LoveFilm and Netflix and it also acquired music streamer, We7 and ebook retailer, Mobcast. It now has added Blinkboxbooks and Blinkboxmusic sites and is planning to target market its millions of customers about the services. Tesco are also about to launch a Clubcard TV channel, which will be available to Tesco’s ClubCard loyalty scheme members, free of charge, and will offer a mix of archive films and television shows. An interesting move after Argos had announced it was to close its own TV station. However, with some £64bn turnover and £3.9bn operating profit, Tesco has the money to compete in the media marketplace and is not about to simply roll over.

Both supermarkets have avoided the device wars and have stuck to being online and device agnostic. A wise move.

So what about Asda? Do they need the HMV store footprint in an online marketplace? They could flip the stores into smaller media outlets, but does that really make a difference?

When virtually every laptop, ultrabook, notebook and tablet today does not have a CD drive and even the car manufacturers are starting to fully embrace online,  is buying a store range that never understood this, is it wise.com?

Wal Mart Buys Into TVOIP

The Internet is now stepping up to streaming video and film, mobiles are able to play them and TVs are becoming wired to use this new delivery. Many have already exploited TVOIP technology (we just made that up – TV Over The Internet). So why have satalite when you can get TV and video over the Internet?

News now breaks that WalMart is acquiring Vudu, an online movie service that is being built into TVs and Blu-ray players. Research firm iSuppli, which estimates that over 60% of high-definition televisions will connect to the Internet by 2013. A combination of Wal Mart and Vudu could boost sales of TVOIP ready televisions and players.

Microsoft, Sony, Amazon, Netflix, Blockbuster all offer online TVOIP movie stores and Apple sells movies and TV in its iTunes.

What we are starting to see is a sea change from the days we all bought VHS tapes, then DVD discs to TV and video on demand over the Internet. This is the same shift we see starting in music where players such as Last FM and Spotify are rewriting the rules. We are bound to see the same with other media and even the bookshelf is finally being threatened.

Remember that Amazon was first seen by many as a bookstore but in fact it was building a consumer channel capable of selling anything. Wal Mart are now building an integrated TVOIP which could connect them to many households and of course sell anything.

Is Apple's Tablet Unpalatable?

So we return to the iPad and its Flash denial and current Camera shy offer. It has certainly stirred the market, but will Appleworld, its geek following and its renown agoraphobia be enough to compete?

We now find ourselves with yet another proprietary and restrictive world for books. Apple may support ePub but only their way. We will have yet another locked DRM ironically named ‘Fair Play’, which could mean Appleworld books are restricted to iPhone, iPad and iTouch. Not exactly the interoperable world that many have campaigned for and we all seek and probably even more restricted than Amazon’s much derided position. We effectively will have a common epub format restricted into different worlds, but who cares when Apple has the Midas touch, Google aspires not be evil and Amazon has to be brought down to size. Maybe a bookseller will feature somewhere?

"You know, I'm a big believer in touch and digital reading, but I still think that some mixture of voice, the pen, and a real keyboard—in other words a netbook—will be the mainstream on that," says Bill Gates on the iPad.

It appears the Appleworld is based on the content as well as designer touch. The worlds of iTunes, IBookstore and what maybe iTV.

It is strongly rumoured that a new TV pricing scheme is being formulated by Apple to offer US production houses TV shows to consumers for less than a dollar. Apple currently offers TV shows for $1.99 for standard-definition episodes and $2.99 for high-definition episodes. For an entire season, consumers might pay $49.99 in high-definition for a popular television series. The new price is very likely to be that famed 99c. The price is aimed at driving more consumers to buy the iPad and enjoy music, games, Tv and books all price pointed to attract and where possible locked to Appleworld.

Microsoft has not laid down and has announced Windows 7 based tablets from partners such as the HP Slate, Archos 9 and Acer. Asus has announced their “killer product” which is due in June. The Archos 9 PC Tablet is claimed to be the thinnest tablet on the market. The interesting thing is that when a tablet runs on Windows 7 it means it can run anything that can run on a Windows computer. Another tablet is the JooJoo by Fusion Garage, a Singapore based company. Originally called the CrunchPad it was designed to be a complete web browsing tablet.Then there is the Adam Tablet from Notion Ink, which will come with Google’ Android operating system so offering a different perspective.

Finally, Panasonic is launching a industrial strength tablet built for the tough life of supporting maintenance, law enforcement and field sales workers, which is hardly for the designer ‘media luvvie’ and comes at a 'tough' $3,379 price.

The big question is whether we are really heading towards tablet take-over or to a bigger cloud game in the sky and a different consumption model for media and access. Who will get the consumer time when games, video, TV,music and books sit side by side on the same device in full colour, stereo and animation?

Warner Threatens Music Streaming Model

We have long watched and waited for music streaming to become commercially viable and right back to the days of Spiral Frog we could see the potential, it was just a case of getting the model right.

The big success story of last year was Spotify, who took captured 7 million users across six European countries and presented competition for others such as Last.fm and We7. The record companies came on board, the consumers came onboard, the advertisers came and importantly they started to break the mould. Some said it was just like having your own radio station, playing your own selections and for a premium payment, you could even switch off the adverts. However the majority selected the free model based on advertising sponsorship over subscriptions. Three mobile even plugged Spotify premium into their contracts and we got it included in ours.

Now Warner, one of the four major labels, have declared that streaming services were "clearly not positive for the industry". The real issue is that they are not lucrative enough for labels and the fact is that the are popular with the consumers and are legal.It obviously would make sense to fight piracy with something that consumers clearly want than acting like a spoilt child and saying ' we don't want to play'.

So 7 million are on Spotify, 2.5 million are on We7 and there are others queuing up to offer the new service and we also have the likes of the mobile operates getting in on the opportunity, but a major label now wants to change the game and move the goalposts. Does it sound familiar to other media markets where commercial controls are being fought over?

Will Warner merely tear up the deals they have and tell 10 million consumers they got it wrong and don’t want to play any more? Will they try to shift the price up, demand subscriptions for all and demand a greater return? Will they honour what is in play today and squeeze future deals out?

What is clear is that Warner are showing the sort of uncertainty and arrogance that has been indicative of the music industry labels since the advent of digital. The one industry not to follow is music and its digital music experts, that is unless you want to know how not to do it.

The main legal streaming services have deals with most major and independent record labels and pay royalties for each song played but the amount is less than a label would earn if that song was downloaded or if they had a greater slice of a listener's monthly subscription.

However just to demonstrate that music is a minefield of contradictions, Rob Wells, senior vice president of Universal Music Group International, said only last month that Spotify was well on the way to proving its commercial viability and had, ‘a very sustainable financial model - full stop’.

Will Warner pick up their sticks and leave the field demanding their new terms are met? Will Spotify delist them? Will consumers go back to downloads and the old model or will they return to the pirates? These are dangerous waters and raise many questions about who controls what? It is also about giving consumers a continuity of service and trust that what they have bought or signed up to will not be withdrawn because someone changed their mind.

It would be a tragedy if Warner renegotiates with Spotify,content is withdrawn and the commercials are rewritten before they have had chance to settle. It isn’t just about getting premium subscriptions but also about the advertising model and shifting to streaming technologies and that takes time and importantly needs consumer confidence to be sustained not played with.

The pirates will obviously be watching with interest as Warner tries to correct what they see is wrong with the model today.

Music on Demand = Book on Demand?

As we sit and listen to Spotify, free over our Android phone we now read that HP has joined forces with Omnifone, a cloud-based unlimited music services, to launch a European music store. MusicStation will be available to HP PC customers in the UK, France, Germany, Italy, Spain, Austria, Belgium, The Netherlands, Sweden and Switzerland and will give them unlimited access to millions of tracks for a monthly fee.

New users will be given a 14-day free trial period in which they can download and keep up to 10 DRM-free tracks per month onto their computer, for later playback, copying etc., or can access 6.5 million tracks streamed from the cloud. The monthly subscription is similar to that offered by Spotify.

So would you buy a PC because of it, or would you be prepared to spend the subscription to access it? HP is a gorilla in the PC market shipping 48 million units a year and having 20% global market share, but is the move strategic and about music and media, or merely about shifting tin?

The major issue is one of ‘subscription and access’ to music versus ‘pay for and own’. Music, unlike most media, is often a short time experience which can be in the background and the individual tracks are often repeated far more than any other media. ‘Music on demand’ makes a lot of sense, and irrespective of whether its Spotify’s advertising plus subscription model, or HP’s subsidy plus subscription model, it has to be paid for. What is clear, is that the days of seeing shelves of vinyl or CDs are numbered and if its on a hard drive and accessible on demand, does it really carry the same ownership hang-ups?

The book market should not assume that books are different. As we move digitally ownership and access on demand offer equally interesting options.

eInk Today But Gone Tomorrow?

It now appears that anyone electronics firm standing has created their own ebook reader. Everywhere you turn you find a new one and as we have said many times, differentiating between them is very difficult and even keeping tabs on them is now getting ridiculous. So is this a good thing or a bad one? Does it herald the dawn of ebooks or merely the commodity of technology? As a consumer why would you buy one model and not buy another? Is the device changing the market demand for ebooks or merely flooding the market with readers? Will prices now drop dramatically as competition is forced to slug it out for consumers and the basic technology reaches an economic scale which itself drops the price of the raw material – eInk.

We were asked on Litopia After Dark last Friday what we thought of POD technology and if predicted by some this New Year, POD was finally going to become ubiquitous? Our answer was that a few years ago it offered much and certainly looked the technology to watch, but today it appears to have missed the plot and be past its sell by date. What happened was that publishers merely used the technology to shorten their print run and reduce their risk. Some such as Ingram used it to build a digital repository. Self publishing used it to create low risk publishing. There are many winners such as Cambridge University Press. We failed to shift the paradigm from ‘print then distribute’ to ‘distribute and print’. We merely replaced the press with another more economic one. The channel didn’t change and the economics remained too high to effect change. You can count the number of retailers who installed them on one hand. The likes of public domain, out of print, self publishing who saw POD as their answer to the market may now have a far better solution in full digital. The espresso just went cold and not many people like cold coffee.

So what will happen now with the eInk devices that litter the electronic world?
We hope that the price will drop, not by a few dollars but dramatically and similar to what happened with MP3 player. We hope that all adopt a common standard approach so become interoperable and commodity and stop trying to be something they aren’t. There will be those that believe in their own divine right and push the technology envelope, but the reality is that if they don’t offer something significantly different, the consumer will opt on price and availability. The ones with the most to loose are the likes of Sony, as first to the race can be as much a disadvantage as perceived advantage.

The greatest challenges facing the ‘lookie likies’ is convergence. It hasn’t changed and they now face major wars on the smartphone and emerging tablet front. Some have recognized this an created hybrid 50/ 50 devices with two screens, but the reality is that this costs twice as much in technology and materials and shows the limitations of eInk today. Its like admitting that the technology isn’t up to meeting the consumer needs, but kidding them that two is better than one. By the time eInk goes colour, superior technology such as OLED will have dropped in cost, sorted battery life and become a viable and far more practical offer.

The final challenge is still content and the only thing today that separates one ‘lookie likie’ from another is access to content. Some have started to get exclusive deals to content – ‘we will digitise it but we own it’. Restrictive deals only frustrates consumers, encourage piracy and in a market such as books are dumb. As this becomes access to content increases, then these devices just become even more commoditized. The question is then how big is this segment of the digital market? Will it be overtaken by the online and streaming market? Will devices be less important and access a broader media offer of video, games, music, papers, books, magazines, TV and radio be a greater pull.

Would we as a consumer buy a friend a ebook eInk reader today – we doubt it.

Apple on Demand?

Apple the pioneer of the digital music download is reported by Bloomberg to be in talks to acquire online music-streaming service Lala. Why would someone so dominant with their iTunes offer want Lala and does it indicate a potential shift in how music is consumed?

The Lala service has over 8 million tracks and enables you to listen to any track or album for free but only once. After that you can buy the track for a 10 cents and can access it at any time at your convenience. So instead of buying it and owning it you effectively rent it perpetuity. Obviously the 10 cents add up and its easy to see the business model being successful if consumers accept the change of ownership to rental subscription. The model differs to that of others such as Spotify who charge by the month for their premium service and enable you to access any track at any time and build your own playlists.

Both Lala and Spotify also allow you to buy a download.

So is the ‘world’s most popular online media store’ broadening its range of offer and realising that the online streaming on demand model has a broad appeal? Are they merely saving some money by buying the technology and its members and folding them into a broader and deeper iTunes one?

What is clear to us is that the world of the cloud computing and online media on demand service is becoming real. This changes how we store, service and consume media and importantly changes the economic models that the consumer has long been educated to live with. Gone is the physical ownership and my library is on my shelf model and in comes the ‘click and get it’ on demand at anytime in any place one. There are potential pitfalls to ownership – ask anyone with betamax, VHS, 8 track, audio cassettes etc. There are pitfalls to the on demand world which is totally reliant on the economic sustainability of the service. Therefore the hybrid mixed model would appear to offer the best of both worlds today and a platform for radical change tomorrow.

The obvious question is that of books and whether the same changes will appear. The answer is a simple yes and that they are already happening. The impact is both significant and as yet little thought through but the opportunity is clear and players such as Google are clearly seeing it today. The one saviour is that any streaming service could offer up any media. This means that there will be some battles ahead but that there is no reason why the likes of iTunes or Spotify or Google Editions can’t be one stop media on demand services.

Zennstrom and Friis Enter the Music Streaming World

We have written much lately about the digital music streaming services spearheaded by the likes of Spotify and now those serial digitaria Niklas Zennstrom and Janus Friis have entered the race. These were the two behind Kazaa and Skype and the failed TV service Joost. The service will obviously mimic others and pick up the libraries of the major players and create a subscription streaming service that’s between desktop and mobile. It is expected to be initially rolled out in the US.

So we now have a crowed space with Pandora, Napster, Nokia, Last FM, Sky and others all trying to capture the streaming market.

From the book world it is interesting to note that this emerging market is only possible because the labels retained their digital content and didn’t rely on others to digitise and own the content.

However the music streaming world isn't all plane sailing and news today of Nokia's 'Comes With Music' service is not good with the service struggling to make any impact. Music Ally claim that only some 107,000 users have signed up for the service worldwide, with 32,000 of these being in the UK. The service which was launched in December 2007 allows subscribers to legally download more than six million tracks and keep them forever, has failed to take off whilst the likes of Spotify have exploded. It may be a lesson to those who assume that their brand and wallet guarantee success.

Sky To Enter The Music Streaming Business

So Sky has announced that it is to launch an online music service that will offer customers access to more than four million music tracks for download and streaming. Instead of a single subscription they have chosen two, one at £6.49 a month, which allows the download of one album or 10 individual track and another at £7.99, which increases the track to 15. However the albums appear to be priced differently some at £6.49 and other at £7.99 and dependant to your subscription is what you can download. Without even trying to understand their logic it is madness! All Sky broadband customers who access the site will receive a free downloadable album worth £6.49.
Sky is obviously looking to build yet more subscriptions to their TV ones but there again where’s the bundle offer?

We think that iTunes has built its brand and loyal users and others such as Spotify are clearly giving everyone a run for their money and there is always Napster. Will the subscription model work? Will consumers wake up and realise ownership doesn’t make sense and flip to the streamed model? Will players such as Sky be able to cross brand and cash in on the new models?

What is clear is that streaming is happening and people are warming to it. What is also clear is that anybody can play.

Spotify March Onwards and Upwards

Many who read this blog may be fed up with us reporting on Spotify but when news is so good and potentially offers so much we are not embarrassed to back winners.

While we all wait for those Apple app censors to approve the music streaming app we discussed a few days ago the Spotify team are rumoured to have raised €15.3m from Northzone Venture Partners at a monster €71.6m pre-money valuation. The service is still in a private beta yet is storming both the investment and music market.

Today comes further news that UK network 3 Mobile is currently in talks with Spotify, to put the music service on its handsets. 3 were the same people to offer free skype calls and Spoyify could be an interesting competitive offer, especially if the Apple police turn the app down.

It is understood that there are options to pre-loading Spotify on new handsets, as making it downloadable.
Well done O2 and Spotify for going where others may fear to tread.

Spotify Continues to Break New Ground

The music streaming sector is just about to become significantly move interesting. We have long supported the Spotifty service which in our opinion is one of the music models for the future and makes consumer and business sense. Spotify has just announced a deal with IODA (Independent Online Distribution Alliance) which will add a further 2 million tracks to its catalogue. We are also aware that it has plans to launch in the IUS later this year and there are rumours of an iPhone app.

However, we now await the heavily rumoured Microsoft offer, (they always appear to be late to most parties today). We believe the Microsoft entry will have a significant impact in raising the profile of streaming services, add competition if integrated with its other offers, could pose a threat to Spotify whose stellar growth has been largely built on word of mouth. The US may prove a major battleground.

The other interesting aspect of Spotify’s latest deal is that it will not only bring in independent labels and artists such as The Prodigy, Bob Marley and the Wailers , but also Stephen Fry’s witterings. This in turn starts to question why not audiobooks ? The question is whether a streaming service should be restricted to one genre, media format or whether it should be open to all. The obvious line in the sand today is audio versus visual, but is that a real line tomorrow? When video can easily accommodate audio, should audio restrict itself and in doing so leave itself exposed?

If we were audiobook publishers we may well be tempted to start to think hard about Spotify. Forget trying to imitate and copy it or looking for a specific audiobook service. This approach is too narrow and often tied to day’s model, but look instead at making a step change that is clearly making sense to others. What will it mean to audio rights, royalties, earnings – we don’t know today, but that is no excuse to ignore it.

Spotify Continue to Make Smart Moves

We continue to be impressed by the clear thinking of the people who run what is fast becoming the music model streaming site. Spotify continues to learn from others and navigate what are challenging waters where many have floundered before them.

They now allow unsigned musicians to upload their music onto the service. So are they now going to get flooded with pirate tracks and illegal music and wash their hands and claim a safe harbour like many today across the media market or take proactive action to control what is uploaded? Spotify has signed a deal with Ditto Music, where acts can upload their music and are now be able to type their band's name into Spotify and see their tracks. Ditto Music charges a £2 per month and has made a name for itself bringing unsigned acts into the charts through digital distribution. Like regular acts, unsigned bands will be entitled to royalties when their tracks are played . US band Finch, will be one of the first available on Spotify through the new deal with Ditto Music. By introducing a filter and charged service they have taken a wise step to avoid pirate uploads.

Spotify has also gained official approval by the UK’s Performing Rights Society (PRS) which clearly places them on the right side of the industry and avoids the disputes that others have found others such as YouTube embroiled in.

Spotify - A Future Digital Delivery Model?

Spotify is a new online music service offers free online music sponsored by paid adverts and downloads. Created by two Swedish entrepreneurs, Daniel Ek and Martin Lorentzon and based in London and Stockholm, it has already attracted tens of thousands of users who in turn invited their friends to join. This week the company opened the ‘by invite only’ restriction to allow anyone in the UK to sign up. The company founders are reported to have invested more than €8m themselves and have received a €15m injection from two Scandinavian investment companies.

Spotify’s streaming service enables users to pick from a huge catalogue of songs, listen to them for free over the internet and, hear or see a few adverts along the way. Users can also choose to buy a day's worth of ad-free access for 99p, or become a premium subscriber – where there are no adverts at all – for £10 a month.

Spotify does not yet offer links to let people buy tracks today. Although users cannot keep the tracks they hear, there are no restrictions on how many times they can listen to a track. This results in reducing the incentive to download illegally. In the future, the company hopes to provide a service that works on mobile phones, car stereos and even iPods.

We signed up and were duly impressed. Every search brought new options to listen to a wealth of tracks but it was soon obvious that the range could have been deeper. Then we read that the music industry had the removal thousands of tracks in a row over licensing last month.

Other streaming services, such as Last.fm in London, bought by the American media conglomerate CBS in 2007, are growing in popularity as music on demand expands. We believe that the Spotify model could be something that works for movies, games and across all digital content, including books.