You can try out Spotify for yourself, but just how broad is its local catalogue? And how many of its customers does it expect to pay up? To get some answers, Lifehacker chatted with Spotify Australia’s managing director Kate Vale.
The 16 million songs available on Spotify is a large number, but that doesn’t mean there aren’t some big local gaps. Living with iTunes has acclimatised Australians to the idea that we often won’t be allowed to buy stuff that’s readily available elsewhere. Is Spotify going down that path?
Vale says not, or at least not intentionally. “We try and make everything available globally, and that’s our intention but sometimes that just can’t happen,” she told Lifehacker.
Spotify is unusual amongst music streaming options locally in offering a free service, but its business model depends on consumers shifting to its monthly subscriptions. Vale says that overseas experience shows around 25 per cent of customers convert to the $11.99 Premium subscription (the cheaper $6.99 Unlimited subscription, which ditches the ads but doesn’t offer other perks such as mobile device access, is far less popular, she says). “The Premium service is our bread and butter,” she says, and that’s where the money will come from.
Vale says she isn’t worried about the many existing subscription rivals who launched ahead of Spotify. “If anything, it’s actually great for Spotify because it gets Australians used to accessing music in a different way. And we have a free tier; there’s no reason for those customers not to try us as well.”
The most frequent criticism of Spotify is that artists don’t make a lot of money from it, which isn’t altogether surprising: if 75 per cent of your customers aren’t paying, there’s not a lot of cash to go around. Vale bristles at that suggestion, though. “Go back a step. There’s a lot of people illegally downloading music and they’re getting nothing.” Sure, but that doesn’t mean paying them a pittance is any fairer, or any more sustainable in the long term.
“We’ve paid out over $250 million to rights holders,” Vale continues. Of course, rights holders does not equal artists: labels take a hefty chunk and often pay a lower rate for ‘subscriptions’ than for sales, a situation which has led to numerous lawsuits in recent years.
Reports also abound of even big-name acts receiving tiny royalty payments: one oft-quoted figure suggests that Lady GaGa got just $167 for one million plays of ‘Poker Face’. “A lot of those numbers, the facts are not right,” Vale says, but she doesn’t elaborate.
Music consumption habits have been in a state of flux, and the ability to access whatever you want at little or no cost has clearly changed our buying habits. Whether Spotify will have the same success in Australia as in Europe and the US will take time to determine. Asked for her goals for the local operation in its first year, Vale says: “I’ll be happy many Aussies as possible using the service. We absolutely want piracy to decrease. That’s a big goal of ours.”
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