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7 September 2011

Service alters music industry

The music industry in the U.S. changed forever this summer. Imagine being able to listen to any song for free. Now, imagine being able to do this legally and guilt-free, knowing the artists are financially compensated for your indulgence.

That is exactly what happened with the U.S. launch of the music streaming service called Spotify on July 14. The program, originating from Sweden, had been fighting to gain access to the U.S. market for at least a year.

The program can be downloaded for free, upon signing up and receiving an email invitation, with a premium option for users to upgrade for an additional $4.99 or $9.99 per month. With the free version, users can listen to any song in the program’s library of millions as many times as they wish for the first six months. After that, each track can be played up to five times and total listening time is capped at 10 hours per month. The only real requirement for use is an active Internet connection.

The most noteworthy part about Spotify is that the artists actually get paid even if their songs are not purchased. This is made possible by advertisements both in banner form and audio form in between songs, and by users who choose to upgrade. For $4.99 per month, advertisements are eliminated and the six-month restriction to unlimited play is lifted. Beyond that, $9.99 per month enables the mobile version of Spotify for smartphones.

The service aims to give listeners a legal alternative to online file sharing, which is largely to blame for the music industry’s declining revenue, according to a Spotify representative.

“Our biggest competitor is piracy rather than other streaming services and our goal is to offer a user experience that is higher quality, simpler and altogether better than piracy,” the representative said.

Spotify represents an inevitable progression of the music industry to an economic model where music is free, said Spotify user and UM professor Ray Sanchez.

“Now, there is no necessity to purchase music per unit,” Sanchez said. “Why should I have to pay 99 cents per track [on iTunes] when I can just go to Spotify … whenever I’m on the network?”

There have been mixed responses to Spotify from independent artists, especially those who do not have record deals as financially favorable as artists on major labels. While they still get reimbursed when their music is played, it is generally not as much as the profit a mainstream artist would receive for the same amount of plays.

Sophomore music student and aspiring artist Dan Pellarin said the benefits of putting his music on Spotify will still outweigh the lack of payment.

“Any sensible artist who’s trying to make it would realize that the value of exposure in today’s industry is worth so much more than the value of a few dollars,” he said.

Although Sanchez said that artists are currently getting paid more on iTunes than they are through Spotify, he expects the music industry’s revenue from Spotify to grow and eventually surpass that of traditional album sales. The company has received “great support” from the music industry, including mentions of the service on Twitter by artists such as Britney Spears, Justin Bieber and John Legend, said the Spotify representative. Sanchez said the current profit model with iTunes typically allocates 70 percent of music sales directly to the artists, which comes out to approximately $7 for every $10 album sale. Spotify, on the other hand, provides much less compensation per song, but it might make up for that in the long term.

“How long does it take [for Spotify] to make up that $7?” Sanchez said. “That’s the million-dollar question right now.”

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