Two recent articles in HBR comment on the likely impact of Spotify – and how the launch of the Swedish music service could spell a radical change in the future of the music business, the broader content industry – and even Apple’s iTunes service. Maxwell Wessell points out that Spotify is a classic ‘low end disrupter’ that ironically could now have the same impact upon Apple – that iTunes originally had on the music retailing business – whilst James Allworth suggests consumers could get a shock if the Swedish system changes its pricing..
Spotify has created a new model for how music can be consumed; a simple subscription service that makes it easy to transfer playlists across devices, platforms and channels. I think Wassell is correct. As a user – I am biased, but I cannot see why anyone would now purchase a track from iTunes when for around £9 a month I can get unlimited access to build massive playlists that on Apple would lead to financial ruin and divorce. Apple was the early developer and pioneered the way – but could Spotify turn iTunes into a Nokia? Great product, creative – but ultimately, surpassed by smarter new innovators? When iTunes Store launched in 2003 it seemed like a gift from the future, so simple, so efficient so obviously better than other distribution channels. Spotify now changes that future, making iTunes now appear expensive, complicated, restrictive. True innovation does not mean that any brand can now have an unassailable sustainable competitive advantage through smart technology – it often means that other players come in, perhaps adding something better to your idea – and using collaboration and experimentation to develop something smarter…
In another article James Allworth queries if Spotify could bring in users with its subscription model – before hiking prices. Personally – I disagree. Other service models, from ISP’s, to mobile contracts and Sky subscriptions do the opposite: they reduce costs over time and add benefits to retain you as a customer. Also, as the major record companies who have part ownership of Spotify see revenues grow, they will be looking to maximise and grow the revenues – and so increasingly the gaps in Spotify’s catalogues will disapear. Media Futurist Gerd Leonhard has controversially stated that the music business will have to fundementally change its revenue expectations and models – and Spotify’s launch in the US is a substantial view of how future of media content distribution (beyond music) – may perhaps look.
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