Spotify's Share

Apple is under scrutiny for taking a huge slice of in-app purchases and the belief that it favors its own applications over others. This is a fight that has garnered headlines when it comes to gaming, i.e. the Epic Games (Fortnite) lawsuit, but the heavy lifting is being done by the Europeans.

And thank god for that, but I don't agree with everything the European Commission proffers. Like the standardized connector. Tech moves at light speed and you don't want to hold back innovation. Also, the iPhone is much more secure because of Apple's vetting process, to open the iPhone up to third party app stores is a recipe for disaster.

But what I'm talking about today is music streaming services.

In order to back its position, Apple commissioned a study:

"The Success of Third-Party Apps on the App Store": https://apple.co/3E8Q5Rw

I got wind of the report via MusicAlly, a newsletter from the U.K. that I get every day. But I haven't seen reference to it anywhere else. The music press is focused on the minutiae. Who's going up, who's going down, the petty wars. Meanwhile, the big stories are ignored. All we hear about Spotify is that artists are starving. I'd beat this dead horse, but no one can convince people otherwise, so I won't.

But Spotify is not the only music streaming service in the game. Perception is that Apple is a significant rival. But the research says the opposite:

"Focusing on dedicated streaming services (i.e., not including YouTube), Spotify is by far the most popular music streaming service for iPhone users in the US, UK, France, Germany, and Australia and New Zealand, based on listening time. In the US, iPhone users spend more than 50% more time on Spotify than on Apple Music, and more than double the time on Spotify than on Pandora, followed by Musi, YouTube Music, and SoundCloud. In the UK, Germany, and Australia and New Zealand, the gap between the largest player (Spotify) and other streaming services is larger. Across these countries, Apple Music's share out of the top music streaming apps among iPhone users ranges from 19% in Australia and New Zealand to 29% in Germany.

In Japan, Apple Music is the most popular, followed by Spotify and regional player LINE MUSIC."

We've been hearing all this b.s. about Apple catching up with Spotify, but just the opposite appears true, Spotify is pulling away from Apple where it counts, in listenership. Furthermore, the report says that Spotify is especially popular amongst the young, who listen most and are most responsible for the breaking of new artists.

Now in truth Amazon is a stealth competitor. But in reality, Spotify is the world's default streaming music app.

So if more people are listening more...the payment per stream is less. Not that any of these streaming services pay per stream, it's all a percentage, but people want to translate payment into an old metric, when streaming is a new method of consuming music.

Distribution is king. Far more powerful than content providers. Because if you can't hear it, it doesn't exist. And the most people hear it on Spotify, giving the Swedish streaming service the most power in the music business.

So, if you want to be heard, you need to be on Spotify. Same deal if you want to get paid. You can rail against this all you want, but in truth the distributor always has more power than the individual. I could analogize to straight business...it's very hard for independent companies to get their products in grocery stores unless they align with a distributor. The stores only want to deal with the distributor, for numerous reasons, for payment and accounting if nothing else Furthermore, distributors/manufacturers pay slotting fees, yes, they pay to have their wares on the shelves.

So...

Spotify is a business. And it's the biggest business in the sphere. It won via a first mover advantage and constant innovation. There's an illusion that brand names mean everything online, but they don't. If you don't continue to innovate, you die. This is how Facebook was superseded by TikTok.

If you're a music maker, don't complain about Spotify, use it to your advantage. The rock sphere has been hobbled by constant beating up of Spotify, almost always with false facts spewed by uninformed performers. It's not that complicated, but I've rarely dealt with a successful musician who truly understands. An on demand stream pays more than one from radio, like Pandora, and Spotify has a radio feature too. Also, free tier streams pay less than paid tier streams. And you might say to get rid of the free tier, but it's the free tier that undermines piracy and also converts listeners to paying customers. Statistics tell us this.

So Spotify won. Apple Music is an also-ran in music streaming.

And Spotify continues to innovate.

Amazon is leveraging its regular consumer goods business to make inroads in not only video, but music. The company's inroads should be watched, even though they do little self-promotion, they reveal little.

But right now Spotify is where the action is, where the people are listening, where the money is.

These facts were known by insiders, but now they're public.

You don't want to complain about Spotify, you want to embrace it.

But I know you still hate it.


--
Visit the archive: http://lefsetz.com/wordpress/
--
Listen to the podcast:
-iHeart: https://ihr.fm/2Gi5PFj
-Apple: https://apple.co/2ndmpvp
--
http://www.twitter.com/lefsetz
--
If you would like to subscribe to the LefsetzLetter,
http://www.lefsetz.com/lists/?p=subscribe&id=1

If you do not want to receive any more LefsetzLetters, http://lefsetz.com/lists/?p=unsubscribe&uid=0eecea7b60b461717065cbde887c8e25

To change your email address http://lefsetz.com/lists/?p=preferences&uid=0eecea7b60b461717065cbde887c8e25