The future of music listening

This week’s launch of Spotify apps, reflects the intensity of competition for companies trying to become the home of digital music. Google Music, iTunes in the iCloud and the aforementioned Spotify are the front runners to dominate digital music listening. Despite similar end goals, Google Music, iTunes iCloud and Spotify have different tactics and they’ll be very different outcomes for each depending on their relations with the music industry, usage model and integration with music behaviour online.

Google – not yet an A+

Both Google and Apple are trying to lock you into their ecosystems. So you’ll have an iPhone, Mac Book, iPad and Apple TV all playing through AirTunes or a Google Android phone, tablet, desktop and Google TV playing via your wi-fi. Now you’ll notice that Google isn’t in the hardware game, but instead is working closely with electronics manufacturers like Samsung, Sony and HTC to match Apple’s hardware advantage. Google’s in a strong position to pick up most of the PC market, which is about 80 % of computer owners, with its ecosystem. They are offering a locker for people to upload and then access all of their music from cloud storage. This isn’t just a good way of clearing out your hard drive and avoiding synch issues, it would allow you to easily share pirated music- a key motivator for cash strapped young people. Google Music’s other play is to try to capture new musicians from MySpace. By allowing direct uploads to Google Music, you can avoid middlemen and costs. Combined with Google pages or embed functions, MySpace may find itself under pressure. Google’s problems come from: being a late entrant to digital music, a lack of device control, not collaborating with the music industry, a painful set up user experience and the high installation rate of iTunes on PCs.

Google Music logo

Google has been very successful in improving on web services that don’t work as well as they could. With a minimalist aesthetic, they’ve become search, refreshed email , cleaned up instant messaging, shook up the news industry with Google News, revolutionised mapping and took Office to the cloud. Where they’ve been less successful is when trying to fix problems that are already being solved. Google Buzz didn’t improve on Twitter nor did Google Video do more than You Tube (now owned by them), while its uncertain if Google + will persuade people to drop Facebook. With music, what are they offering that’s fundamentally different to iTunes or Spotify?

Google has an enormous audience it can market at through it’s search and You Tube (now the defacto place to find music as well as video). Unfortunately, as we’ve seen with the demise of Yahoo and AOL, exposure is worth very little in the mid to long term if the proposition isn’t right.

In order to start using it you need to spend literally days uploading to Google Music.

So how strong is the proposition? One of the major issues, having spoken to early users of Google Music, is the set up. In order to start using it you need to spend literally days uploading to Google Music. A quick and easy set up is key to mass adoption, so the pay off needs to be much greater for this level of effort.

Then there’s the thorny issue of the music industry. Google have launched their Music service without the consent of rights holders. Using the argument that this is personal cloud storage, not a streaming service, they have got around the need to sign deals with record labels. Not only does this lock them into a long set up process, but they are unlikely to get support from artists through their social properties or fan sites.

Whereas Apple can control the end to end experience and can pre-install programmes across all devices, Google is reliant on active adoption and 3rd part manufacturer support.

Google’s proposition is not good enough yet. They need something compelling to move people off iTunes, as Spotify did through offering an unlimited choice of music- instantly. Whereas Apple can control the end to end experience and can pre-install programmes across all devices, Google is reliant on active adoption and 3rd part manufacturer support. Pre-installation on Android devices may help this but Google are at the whim of manufacturers to support them and create a consistent experience.

Apple iTunes in the iCloud – Default but not faultless

Let’s look at iTunes’ iCloud offering. It is very similar to the Google Music proposition aside from three important factors: quick set up, value added to existing music, device control and music industry support.

iTunes in the Cloud

Due to Apple’s massive music library as well as its dominance as the default desktop and iPhone music player, it is quick for most users to set up. Only files not already in iTunes’ store need uploading; apart from that it’s just a case of uploading a light XML file listing the songs in your library. Not only is the upload quick, but bit rates are improved on the typical 128Kbps mp3 found in most collections. This means you get a richer sound if you’re the average iTunes user.

Not only is the upload quick, but bit rates are improved..

iTunes is the main music player across desktops. The iTunes store is the most popular download music store and Apple can rightfully claim to have popularised legal music downloads. Despite Pete Townsend’s rants, Apple is making the music industry money from an area they were making very little from previously, due to record labels’ refusal to accept a changing digital society. Apple are also supporting a model that suits music industry marketing practices; albums and singles bought and owned for a one off fee.

Now that cloud storage is changing things again, albeit less drastically, Apple has come up with an approach that supports the traditional music industry, whilst giving the user flexibility over their listening device. Apple again is supporting the traditional business and legal models that the music industry is transfixed on, by policing digital rights via its intermediary software. I’d argue that the need to own music is not important to younger generations who have always known the internet. Access is primary not ownership, Apple’s pay per use on such small quantities of music is limiter to younger audiences who expect a limitless bucket of music to choose from at any time. But the issue lies in how to ensure the music industry is onside and that everyone is making money.

Apart form the overall pricing model, another limiter on Apple’s iTunes Cloud is the way the business is focused on hardware sales, above software access. Although iTunes is on the desktop it is not on the Android OS , which is now the most popular mobile OS, having overtaken iOS last year. iTunes doesn’t reside on Smart TVs nor on Games Consoles, which will form a major share of connected device time in 2012. Instead Apple are hoping their Apple TV will be purchased instead. Without manufacturer support, Apple may find it hard to breakthrough to a market that upgrades far slower than the mobile or desktop TV market.

The second major flaw with iTunes is its lack of interaction with the wider web

The second major flaw with iTunes is its lack of interaction with the wider web, apart from ‘click to buy’. iTunes tracks can’t be embedded, tied into social networks, playlists can only be shared on the iTunes Store and you can’t just play things in a web browser. This lack of interoperability with the non-Apple universe means that music discovery is hard to achieve for iTunes. Who will want to curate a playlist that only opens in iTunes and only plays 30 seconds of each song? Certainly not the music press or influential bloggers. So that leaves the unimpressive ‘Genius’ facility or sampling elsewhere (Last FM or Spotify for instance) as the main means of discovering new music.

Spotify – perfect proposition, endangered by artistic licence

It is a miracle that Spotify came into existence at all, let alone managed to grow its library to cover most songs you can think of. When it arrived as a free service, I couldn’t help thinking it was too good to be true, then came more frequent adverts which offset the joy of listening to an album all the way through. So then they offered to get rid of the adverts for a monthly fee, that didn’t wash with me nor many other music fans who quickly returned to You Tube playlists or blogs like Hype Machine, that embedded You Tube clips. What changed things for me and I suspect the 2.5 million subscribers that jumped on board, was offering the ability to put songs on to your phone (putting it into Offline Mode). I now had an unlimited library to chuck on my phone and take with me anywhere, whether I’ve an Android, Blackberry, Windows phone or iPhone.

Spotify logo

As nice as this was for me, I still had a couple of issues: 1) I wanted to get more guidance whilst using the services, 2) I wanted to share stuff I found with a wider group of friends, instead of finding the You Tube clip to share, 3) I wanted to have access on my TV (OK number 3 isn’t me, but it is important to a quite a few people).

Those three issues have now been addressed with varying degrees of success. One of the key advantages of Spotify is its ability to create, co-create and share playlists with other people. Music is an inherently social experience, Spotify plays on this, but the action of sharing and sifting through thematic playlists was left to other sites until recently. So the awkward experience of tabbing back and forth, was moved on when social streams of friends’ live listening habits within the Spotify app. This was then built on with the recent introduction of Apps, that allow you to search through discerning choices of music from top music publications within Spotify. So instead of having We Are Hunted, Pitchfork or Metacritic lists open on one screen, then searching Spotify on the other, these are joined together in a single experience. Spotify has now explicitly positioned itself as a platform for music across the web, something for those who influence music listening to build upon.

Music is an inherently social experience, Spotify plays on this…

The second issue around sharing was then addressed when Spotify was made available through Facebook. Now the leading social network has Spotify integrated within it, the music subscription service is in a powerful situation that offsets the marketing clout of Google and Apple. Spotify has already gained, a reported, 500,000 new paying subscribers within a couple of months of launching on Facebook.

The third issue for the platform agnostic app/platform (applatform if you like) has now started to be addressed with some major tie-ins with TV devices and providers. Virgin Media in the UK, Telia Sonera in Sweden and Finland now come with Spotify via their PVR services. Boxee in the States and Western Digital’s television products also support the Spotify app, but expect more names to follow in the coming months.

Now the downside. Two things are problematic for Spotify – device control and music industry support. Spotify is not pre-loaded on devices so must rely on active discovery of their service. Facebook prominence helps, but as more music services plug into the Facebook stream, this advantage will diminish. Spotify therefore must always be on the front foot for promotion and maintain its uniquely extensive catalogue as an ‘all you can eat buffet’. Cue problem two.

Many parts of the music industry have grown impatient by the lack of revenue coming their way from Spotify. A report this year claiming that Spotify was cannibalising record sales and downloads (that offer higher profit margins) prompted over 200 labels to withdraw their music. Whilst Coldplay withheld their new album from Spotify, following on from Adele’s 21 release. There are many headlines around the revenue paid to artists, such as the $167 that Lady Gaga is supposed to have received for a million Poker Face plays. Not only are these often false just calculating one of many payments to artists but it is potentially comparing apples with pears. Steve Lawson convincingly argues that Spotify is akin to radio rather than a downloads store, claiming artists are actually making more than they would by playing records on BBC Radio 1. Lawson also explains that many people would have sampled the album on Spotify before buying it, so that Spotify use was merely a marketing strategy rather than an end in itself. I’m not sure how true the analogy with radio and digital marketing is – I can do everything I want with the music I have on my Spotify premium account, why do I need to download a song? I can play it on any device whenever I want and scroll through it, what else do I need? Apart from DJs, remixers and audiophiles there are few others who actually need to own songs.

I can do everything I want with the music I have on my Spotify premium account, why do I need to pay-per-song download?

Spotify is smart but essentially leveraged on a music catalogue it does not own. To get out of this pickle Spotify needs to :

a) convince the music industry that the more people who use it, the more royalties they’ll get. So they should support it.

b) that more people discover their artists so will pay for gig tickets, dvds and heavily marked-up merchandise.

c) increase the royalty rate, perhaps paying a higher rate once an artist has reached a certain threshold of plays.

d) emphasise the steady and ongoing transfer of funds from subscribers, versus the short-term bursts of payments that occur on traditional music purchases.

In summary

Apple iTunes and Spotify are looking strong at expense of Google Music, unless Google can think of some clever way of leveraging their current You Tube advantage. However, as new generations grow up they will have less of a need for ownership of materials, this will advantage services like Spotify over Apple’s iTunes model. As long as Spotify can maintain relationships with artists and record labels by providing significant royalties or click throughs to higher grossing revenue generating products (like with Songkick tickets) they look set to become the defacto music player. That is until Apple copies their model.