How Piracy in Music Industry Has Inspired Spotify and Apple Music

Introduction: The Evolution of Music Consumption

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

How Piracy in the Music Industry Has Inspired Spotify and Apple Music

Spotify’s formation in 2008 interlinked the demand for access to the music that one wanted to listen to with legality. In an interview with The New Yorker, Spotify CEO Daniel Ek explained his inspiration from 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” (Seabrook, 2014). There was a great understanding that with the inevitability of technology’s growth, piracy had a more attractive model than legal methods, drawing those who would consider paying for a service to pirating. Ek goes on to explain, “It’s not like people want to be pirates. They just want a great experience” (Seabrook, 2014).

Since Ek’s comments, Spotify, as of September 2019, has grown to have 248 million monthly users worldwide, with 113 million paying subscribers, becoming a part of the largest revenue sector for music sales since 2016 (Spotify, 2019). This achievement demonstrates how a legal platform can successfully compete with piracy by focusing on user experience and accessibility.

Challenges in the Subscription Model

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” (Spotify, 2019). Despite this, Spotify, like all of its competitors, holds the subscription service for its premium features. This is likely due to the observation that “in the United States, subscription-based television series, for example, fared remarkably well through the recession” (Smith, 2020). Several music labels were quick to notice this effect, with executives at Warner Music explaining that they’re “bullish on subscriptions” (Smith, 2020).

Spotify's Vision and Impact on Piracy

It’s understood that Ek wanted to withhold a free music service due to his admiration for Napster, but to maintain good standing, “the idea of selling subscriptions was rather forced upon Spotify by the holders of music licenses” (Seabrook, 2014). 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” (Seabrook, 2014). 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. According to YouGov’s Music Report, “one in ten Britons (10%) download music illegally, down from 18% five years ago” (YouGov, 2019).

Conclusion: The Future of Music Consumption

Currently, there is a large concern over the rise in piracy in the music industry. There is a heavy question looming over what the future holds for audiences and their listening habits. The following years will show whether individuals will continue to pay for the different services available or whether it will drive audiences back to piracy. The industry must remain vigilant and innovative to adapt to these changing dynamics.

References

• Seabrook, J. (2014). The Song Machine: Inside the Hit Factory. W. W. Norton & Company.
• Smith, J. (2020). The Subscription Economy: How Subscriptions Improved During Economic Downturns. Business Journal.
• Spotify. (2019). Investor Letter, Q2 2019. Spotify.
• YouGov. (2019). Music Report 2019. YouGov.