Spotify is the music industry's Hulu, with a few interesting wrinkles.
On the surface, it's a music streaming service that allows instant access to around 8 million tracks, searchable by artist, album or record label. Before you get too excited, like Hulu, it's geo-blocked for Australia.
The big difference (apart from it's Swedish origins) is that it's a peer-to-peer service, meaning that it uses the network of subscribers to distribute content, while Hulu has a centralised repository.
The Model
Spotify is an ad-funded and premium content model. In the free account, ads are played between tracks - like commercial radio (hopefully without the Harvey Norman ads). Users can upgrade from the free account to a premium account with no ads and a range of other features. Anyone can buy selected tracks for online retailers.
Artists are given a share of ad revenue on a pro-rata basis.
The big four record companies are shareholders in Spotify
Hidden Costs
Because users essentialy provide the library from their own computers, they will incur download costs in streaming the audio from its source and upload costs for providing content to peers.
Why Should I care?
Spotify is reported to be losing money at the moment. Nonetheless it's an experiment in monetising creative content that is outside the iTunes
corral. If a peer-to-peer network can work for music, it could work for screen content. |
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