August 7, 2012 by marceladevivo
It’s no secret that the music industry is going through some very tough times. It’s been a challenge for the field to adapt to changes in how people purchase and listen to music. But one of the positive signs of how the business is working to keep up with the times is the partnership between Facebook and Spotify.
As both are powerful players in social media and music, the combination has the potential to be a revolution in how people are listening and discovering music.
Spotify lets its members stream ad-supported music for free, with a maximum listening time of 10 hours per month. It also has two paid subscription options that eliminate the promos, allow for unlimited listening, and offer a fuller mobile experience. We’ve already covered how, as a company, Spotify has excelled at creating a strong Facebook Timeline presence, but this partnership with Facebook could be a test case of how streaming and subscription services will perform in the future.
What the Partnership Includes
For casual members, it’s now possible to use Spotify like any other third-party Facebook app. That means the music they listen to on the streaming platform is posted to their profiles. It also shows up in the News Feeds of their friends. The tracks are shown with play buttons, so a friend can listen to the same music with a single click.
One of the other big changes enacted by this partnership is for the musicians. Pages for artists and bands now have “Listen” buttons right next to the “Like” buttons. If a member has linked his or her Spotify account, then that member can hear work by a musician directly within Facebook. That gives him or her a chance to hear tracks and possibly decide whether or not he or should wants to Like that the artist’s Page.
There are also more sharing elements integrated into Spotify’s platform. If you connect the two accounts, you can see what your Facebook friends are listening to in the Spotify interface. You can also share playlists and songs with those friends within Spotify.
Concerns About the Streaming Model
Spotify has not avoided criticism. Some very popular artists including Adele, The Black Keys, and Coldplay have refused to let their recent albums be streamed on the platform because of concerns that having their music on Spotify would hurt sales on iTunes. Some independent artists have also said they are not fairly compensated when their music is streamed on Spotify and have threatened to quit the platform.
The leaders of Spotify and some other music executives have tried to correct many of the misunderstandings about the company’s financials. One of the main points is that the company contracts with labels rather than individual artists, so Spotify never pays musicians directly. That means the label’s separate arrangements with the artists and with Spotify determine how much money goes into the musicians’ hands.
That money is based on how many times a song gets played on Spotify. By connecting music from the streaming service to a social network, artists and their tracks can get more exposure and earn more money. Spotify has not proven yet whether it can be profitable, or whether the involvement with Facebook will be a big factor in its financial performance. The company’s main expense is the cost of licensing the music it makes available for streaming, but its losses are getting smaller as revenue is exploding. The added visibility for Spotify’s listening experience could expand its user base, and possibly translate into more subscriptions as the platform grows in popularity.
There are two important notes to take away from this partnership. First, Spotify is just one of many companies that has created an app for integration with Facebook. The social media network has apps for brands ranging from The Washington Post to Instagram to Raptr. It seems like any company that has content it wants to be seen and shared is developing a tie-in with Facebook, even other social channels. For businesses in media, culture, or entertainment, this seems like an important step to take.
Secondly, despite the concerns of some artists, the streaming and subscription models appear to be the favored way to access not only music, but also movies and television. It’s a change that the entertainment world is still figuring out how to navigate so that creative work receives fair financial rewards without losing an audience that’s accustomed to having everything on the Internet for free. Spotify’s success or failure, especially with the partnership of a wildly popular social network, will likely set the standard within that business model for the music industry.
Do you think Spotify’s business model will succeed? Let us know in the comments!
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