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The Spotify Bait 'n' Switch

But has Daniel Ek really gone over to the Dark Side?


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Spotify CEO Daniel Ek came with a bomb on 14 April.

http://www.spotify.com/uk/blog/archives/2011/04/14/upcoming-changes-to-spotify-free-open/

Through an initially meandering post, Ek gets around to explaining how original Spotify terms of use will now be severely crimped.

  • Everything gets severely limited after six months of use.
  • Those who've used the ad-financed 'free' version for years get screwed too.
  • Free users can only play any one single track 5 (five) times.
  • Free users get a total of 10 hours pcm listening time.

Ek then goes on to argue the new limitations won't affect many users. So why introduce them?

Palpatine Ek

Reactions didn't wait. The Spotify site has been overrun with animosity, the plurality of users stating they will leave the service altogether and go back to file sharing. There are 86 (eighty six) pages of furious comments at time of writing.

Is Daniel Ek a bad guy? Is he a senator Palpatine waiting for an opening to establish world domination and screw over the people who made his love child a success in the first place?

Probably not.

Who Owns Spotify?

Daniel Ek might be the hard-working CEO of Spotify (with gray eminence partner Martin Lorentzon) but neither of those dudes have had a controlling interest in their own startup for a long time. It's record companies who own and control Spotify today.

Daniel's told riveting stories about his incessant globetrotting to get the record companies to grasp what Spotify is about, about how he's left meetings on Manhattan and stood in the pouring rain below, ready to give up, time and again. Daniel and Martin had to ultimately sell the soul of their company to make it a success.

They traded controlling interest for access to the song catalogues. The record companies paid money up front for their Spotify stock - but how can $35,000 represent a double digit interest in the company?

It's the record companies who set corporate policy. It's the record companies who determine the royalty rates for the artists. It's the record companies - and not Spotify - who so screw over their own artists so notables such as Sweden's Magnus Uggla and Bob Dylan withdraw their catalogues and boycott the company.

Nobody's arguing about Spotify's merits - Uggla says he thinks it's wonderful - but what they don't like is the way the record companies treat them. (Coincidentally both Uggla and Dylan were shafted by the same record company - CBS.) And Uggla took things personally - directly accused his long time friend at CBS Sweden of shafting him.

Zero Cost at Point of Sale

The only viable marketing tack in today's world is the same one used by the NHS in the UK - zero cost at point of sale. Then too: subscription systems simply do not work.

Ask Steve Jobs: he tried for years to get the 'tards in the record companies to grasp this simple truth. They'd been trying for years to force subscription services on the InterTubes but with ignominious failure always the result. Steve Jobs tried for years to convince them to give up their stupid subscription service idea. For years.

Finally Steve Jobs got them to relent a bit. He got to start iTunes. For the first time ever, those singularly untalented corporate executives were making money again. Did they kick back and thank Steve Jobs? No. They immediately began bitching with him and trying to reintroduce their own ludicrous ideas.

This is very important: Spotify was conceived as an ad-financed system with zero cost at point of sale. Keep that in mind.

From iTunes to Spotify

Spotify has been disruptive: it's basically made the entire iTunes idea irrelevant. People don't want to own their music - they want to listen to it. The opportunities inherent in the Spotify model transcend everything else in the world today - including file sharing.

But seven countries in Europe is not the whole world. And Daniel Ek announced long ago he'd be conquering the rest of Europe and North America too. Except that never happened.

Daniel Ek has two of the 'big four' ready to sign contracts for North America. This is a huge achievement in salesmanship. Daniel Ek is probably ready for the Gray Havens. Of course he needs all four (as well as the indies) and has to deal with Edgar Bronfman (or worse) and has to once again entertain their ideas of subscription services.

Subscription services suck. They've never worked and they don't work now. The aggressive ad campaigns on Spotify are not a sign of the cynicism of Daniel Ek but of the idiotic demands put on him by his shareholders - the record companies.

It really takes time to fully appreciate how stupid and insensitive these record company execs really are. They work in an industry where artists regularly get screwed (and are being screwed even today). They employ mafiosi to harass and scare little old ladies to set an example for file sharers with no regard for the innocent lives they destroy in the process.

They have a business model that no longer works - no one needs their contacts and distribution methods anymore. They're out of the picture. And holding on for dear life.

But worst of all is their singular lack of the aptitude, creativity, and resourcefulness their predecessors must have had to establish those record companies in the first place. For there must have been great pioneers back then. But now the money's passed into the hands of newcomers who can't even merit a job filling the water cooler.

Spotify would be completely free if Daniel Ek were allowed to fulfill his original vision. And Daniel Ek's vision is the only way such a service will ever survive. Daniel Ek cannot stand still - he's being forced to introduce this 'bait 'n' switch'. Those record companies don't care how much flak he takes, how much this hurts him personally - the record companies never give a shit.

And they can pull the plug on his operations in the EU at any time if he doesn't play ball with them on his new North American contracts.

Spotify needs a uniform worldwide set of services. The cost of implementing all those draconian limitations on accounts is considerable. But the record companies don't care. Don't fight Daniel Ek - fight the record companies. They deserve all your scorn. Daniel Ek deserves your support and sympathy.

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