How Piracy in Music Industry Has Inspired Spotify and Apple Music

With the huge decline in music revenues across the globe, its key to review the impact that the shift in habits of audience’s preferences for easier accessing music. With the turn of the 21st century introducing the world with portable digital music devices such as MP3 players and iPods. This lead tech-savvy individuals to continue to access their music for free through the piracy programs that followed in Napster’s footsteps, being Lime Wire and Kazaa. It was only the ecosystem of streaming that dragged music revenues from its steep decline. 

Spotify’s formation in 2011 interlinked the demand for access to the music that one wanted to listen to and legality. In an interview with The New Yorker, Spotify CEO Daniel Ek explained his inspiration for Napster saying, “It came back to me constantly that Napster was such an amazing consumer experience, and I wanted to see if it could be a viable business.” There was a great understanding that with the inevitability of technology’s growth, piracy had a more attractive model to legal methods, drawing those who would consider paying for a service to pirating. Ek goes onto explain “It’s not like people want to be pirates. They just want a great experience.” Since Ek’s comments, Spotify as of September 2019, has gone on to have 248 million monthly users worldwide, with 113 million paying subscribers and being a part of the largest revenue sector for music sales since 2016.

A highlighted issue by Spotify themselves in a letter to their investors in July 2019 was that they “missed on subs” which was subsequently reported with worrying titles, for example “Spotify Now Has 232 Million Users, But Only Half of Them Pay for Music”. Despite this, Spotify, like all of its competitors holds the subscription service for its premium features, this is likely due to that “in the United States, subscription-based television series, for example, faired remarkably well through the recession.” Several music labels were quick to notice this effect with exectives at Warner Music explaining that they’re “bullish on subscriptions”.

It’s understood that Ek wanted to withhold a free music service, due to his admiration for Napster, but to maintain in good standing, “the idea of selling subscriptions was rather forced upon Spotify by the holders of music licenses.” At the beginning of Ek’s success, he stated in an interview, “From the very beginning, our vision was to offer a legal music service, as good or better than the pirate sites, giving users access to all music in the world, for free.” It’s clear that with the combination of free ad-based services such as Spotify and YouTube, in conjunction with the paid services, Ek has somewhat accomplished his goal as music piracy is at a low with “YouGov’s Music Report reveals that one in ten Britons (10%) download music illegally, down from 18% five years ago.” 

Currently there is a large concern for the rise in piracy in music industry. There is a heavy question looming over what beholds for audiences and their viewing habits, the following years will show whether individuals will expend the cost of the different services, or whether it will drive audiences to more piracy.