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Music streaming battle heats up for Spotify

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Music streaming battle heats up for Spotify
Spotify could face competition from more than just rap mogul Jay Z. Photo: Evan Agostini/Invision/AP
07:56 CEST+02:00
This week's all-star launch of US rapper Jay Z's streaming music service may not have caused its Swedish rivals at Spotify to lose sleep – but analysts predict tough days ahead as tech giant Apple prepares to enter the fray.

Monday's glitzy rebrand of the Tidal service which rap mogul Jay Z bought from another Swedish firm, Aspiro, for $56 million (52 million euros), was billed as a new departure in streaming: higher quality audio and owned by artists for artists, not record labels and tech companies.

After a day's silence the news was welcomed by the world leader Spotify, despite the barely veiled criticism of streaming companies like itself from US superstars, including Madonna and Alicia Keys, at the launch in New York.

Jonathan Forster, Spotify's vice president for Europe, told AFP in Stockholm that his company welcomed the artists' initiative.

“I like the rallying cry that artists should get involved... We're definitely not trying to keep anyone down,” he said.

Spotify has come under fire from artists like British band Radiohead and US pop star Taylor Swift – who has shifted her catalogue to Tidal – protesting that Spotify does not pay artists their fair share.

Its founder Daniel Ek has hit back, saying it had paid out $2 billion (1.85 billion euros) to artists and record labels since it launched in Sweden in 2008.

With an estimated 60 million users in 58 countries, including 15 million who pay for ad-free music, Spotify dwarfs Tidal, which had just over half a million users in 31 countries when Jay Z bid for it in January.

But the world number one is a minnow compared to Apple in overall music consumption. The US giant, which plans to launch its own service in the coming months following its $3.2 billion purchase of Beats Music last year, has about 500 million iTunes users.

“The Apple music service is the one I'd be running scared from it I was Spotify. At the very least 50 percent of Spotify subscribers also happen to be IOS (Apple) device users,” said Mark Mulligan at London-based music industry research firm Midia.

In a survey published by Midia this week, 62 percent of music subscribers in the US alone said they were likely to sign up to the new service.

While Apple also has to deal with record labels – reportedly failing recently to secure lower licensing fees – Spotify faces an even bigger challenge from YouTube which offers free music videos available on all devices with an internet connection.

“As a market leader you're probably more worried about where people are listening to music on the internet. More people are listening via YouTube which is owned by Google – the biggest internet company of all,” said Olle Aronsson, at the Swedish tech news site Breakit, adding that streaming is still in its infancy, representing less than 15 percent of music sales revenue in the US and Britain.

But Spotify, under fire from record label bosses and artists to cut back on its own ad-supported free music – which it uses to attract paying clients – sees free music as the future.

“We've always thought that 'free' has been a huge part of music wherever you look – historically you had (free music on) the radio and you went out and bought vinyl or cassettes,” said Forster, adding that illegal downloading has made charging for music difficult.

“We also felt that it's about scale. If you're talking about a billion or half a billion users you can start building really interesting free businesses. If you're an advertising business you can tap into Google or Facebook levels of revenue,” he said.

“The global market of people who like music is almost everyone on Earth.”

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