Allright. So I love Spotify and I love the fact that it is free too. But I think the time really has come for Spotify’s backers to finally come clean and say they are going to start charging for the service. There are online streaming music services that are free and profitable – Rhapsody being the prime example – but they limit the amount of music users can listen to.
Founder Daniel Ek has been pleading for more time to make the company profitable on the Spotify blog. That sounds ominous to me.
Given the choice of paying for Spotify or losing it I know what I would choose. So here are five reasons why Spotify should go subscription only now
1 It is going to run out of money. So far the company has taken 71 million Euros of investment. Its investors have deep pockets too. However not even the twelfth richest man in the world is going to carry on bankrolling a company that so clearly doesn’t look like it will ever make money while pursuing its current business strategy. If it sticks with the free model those bandwidth costs will continue to be huge and it could threaten the existence of the company as a whole. There’s a good feature which takes a punt at how much cash Spotify is burning here.
2 It could concentrate on innovating – Spotify is without a doubt the best online music service in the world and its innovations have been astonishingly good. From iPhone and Android apps to the ability to stream music while the service is offline Spotify has changed the nature of online music. If money were free for it to carrying on innovating it would certainly attract many more happy subscribers. I would rather subscribe to an innovative service than one that plays safe as it is so cash strapped.
3 So many free Spotify users are near the tipping point – If I had a quid for every person who has told me recently that they are about to subscribe to the service but just haven’t quite got round to it the beers would be on me. If Spotify canned the free service then those users would have no choice. If the service was £5 a month the subscribers would base would be huge. The target is apparently to convert 7% of Spotify users into subscribers. Spotify hasn’t released figures but I guess the figure is a long way off at the moment, even after all the innovation. This way round I think 15% would be feasible. Offering limited free streaming (like Rhapsody) would be good for Spotify’s bank balance, but would undermine it as a brand and again give users another excuse not to pay up.
4 People might value music a little more again – It is a controversial view I know, but in some way free streaming of albums has devalued music. In my opinion it has made it even more commoditised and undermined the value people put on listening. If people had to pay even a small amount it might be make them value that music a little more.
5 No more ads – yay! They really are intrusive.