November 5, 2014

Spotify and Taylor Swift

Ever since the explosion of the internet and digital music, the music industry has struggled to keep pace and find ways to monetize their product. iTunes was ground breaking in that it flipped the business model for musicians (selling more singles at a cheaper price point than selling less number of whole albums) and provided an online distribution channel for musicians and labels that today brings in billions in revenue. Spotify and other music streaming services have brought a new dimension to online music distribution in a continuously evolving landscape.

Probably in a effort to gain more control over how her product will be monetized, Taylor Swift and her management team have pulled out her music catalog from Spotify. This was timed perfectly with the launch of her new album.


For those who are unfamiliar, Spotify's business model works this way: consumers pay a monthly subscription fee for a premium ad-free service. The  subscription fee goes mainly to the artists. Spotify, on the other hand, earns from advertising that it sells on the free service that anyone can use.

I think Spotify is a great product (I am actually a subscriber) and I hope that this is something that does not spiral out of control (ie more artists following suit and pulling their catalog from Spotify) as it will be the consumers in the end who will lose.

People love music and I believe that as long as it remains relatively affordable, people will be willing to pay for it. The music industry needs to get creative in finding new and better ways to do so because platforms continue to evolve to match consumer behavior and I often feel like the music industry is playing catch-up.