At first glance, Spotify and Rdio could be mirror images of one another. Both streaming services offer a catalog of on-demand songs from all the major music labels, both feature strong social media integration, and heck, each offers two tiers of premium subscriptions at matching dollar amounts. Dig down beneath the surface, however, and you’ll see that the devil’s in the details. So which Internet music service delivers the most bang for your buck? Let’s dive in and see!
When we wrote a streaming music services round-up on Maximum Tech, we only briefly touched on Grooveshark, the popular service based around user uploaded tracks. “And, um, we're still not completely sure that Grooveshark is legal,” was the extent of our coverage. As it turns out, newly revealed emails from Grooveshark CEO Sina Simantob prove that, well, the company’s entire business plan hinges on its dubious – at best – legality.
While it’s a fact that some lame-o ideas flat-out just won’t die, no matter how long in the tooth they are – VHS tapes, dial-up Internet and DRM, anyone? – the inverse is also true. Sometimes, truly groundbreaking ideas pop onto the scene long before the mainstream is ready to embrace it. Rather than praising the success stories, this article takes a look at the lesser known forefathers that made best sellers like the iPad and Hulu Plus possible. Grab a seat and raise a toast to these technologies born before their time; without them, modern life wouldn’t be as comfy and convenient as we know it.
Probably every beginning guitar player who’s ever struggled with a chord diagram has looked down at his instrument and thought, “Man, it would be so much easier if those little diagram dots could appear on my fretboard instead.”
The Fretlight does exactly that, putting an end to the madness by making those diagram dots part of the fretboard itself, via a grid of embedded LEDs.
Apple's recent success is continuing to attract attention from federal antitrust authorities. Sources familiar with the matter are saying the justice Department is starting a preliminary inquiry into anti-competitive practices in Apple's iTunes music store. The investigation will reportedly focus on Apple's ability to influence marketing decisions in the recording industry.
The event that may have precipitated this preliminary action occurred in March, when Billboard Magazine claimed Apple was pressuring music labels to stop taking part in Amazon's promotional deals. Apple was allegedly threatening to withdraw marketing support from labels that worked with Amazon. Another contributing factor is that Apple actually hold more of the music sales market than most people realize. Of all sales (digital and physical), Apple controls 28% of them. In just digital downloads, Apple has a 70% market share.
With this, and the recent investigation of Apple's new iPhone developer agreement, it's clear federal authorities are watching the Cupertino company more closely than ever. Do you think Apple's behavior is ant-competitive?
The record labels, if they were honest, would say they hate digital music. It’s a marketplace over which they have little control. And it’s a marketplace where they have to compete. Neither of these are they used to doing. So when Rob Wells, the senior vice-president Digital for Universal Music Group International (UMGI) declares that the music service Spotify is making money for them, one has to wonder what’s really going on.
What’s going is this: Spotify operates on two models. The first, in the United Kingdom and Spain, is royalty-based; payment received based on songs sold. The second, Sweden, Norway, Finland and France, is based on subscriptions and advertising revenues, which UMGI gets a cut. You don’t need to be a rocket scientist to figure out which UMGI prefers: “In all its territories bar two, Spotify pays the labels from a mixture of the money it generates from advertising revenues and subscriptions. That to me equates to a sustainable business model,” said Wells. Rather than worry about having to compete for royalties, UMGI wants a sure-bet piece of the action.
Wells’s take makes sense for the music industry. But does it make sense for the delivery of digital music? The big providers of music, Apple and YouTube, don’t pay guarantees but royalties or percentages--they make you work for your money. And iTunes is by far the dominate method of digital music delivery. (Except for Sweden, where it’s number two to Spotify.)
Still, Wells isn’t giving up hope this can’t change. According to Wells a music service needs only convert about 10 to 12 percent of its user base to subscribers, and the economic model becomes viable. The problem of getting that 10 to 12 percent to change is simple: restrict access, which Spotify has reverted back to. (Its returned to an “invitation only” sign-up.) This, however, isn’t so much a new economic model as putting lipstick on the pig that was the old model.
And then there’s the grain of salt: major music labels, including independents, have an equity stake in Spotify. Naturally they’d like to see that pan out. Promoting the superiority of Spotify is a no-brainer.
All this means nothing to us. Spotify isn’t yet available in North America. That’s expected to change sometime this year.
Microsoft seems to be pushing ahead with software updates to the Zune HD. In an upcoming spring firmware release, the player will get support for XviD encoded videos and streaming playlists. If you have a hard drive full of XviD files (that you may or may not have gotten via BitTorrent) this is certainly good news, as you won’t have to convert them whenever you want to view them on the Zune HD. Support for the similar, but proprietary, DivX codec is unlikely.
The streaming playlists will be an extension of the Smart DJ offering already in the Zune desktop software. This will allow the device to offer playlist suggestions much like the iTunes Genius feature. Smart DJ will pack a little extra surprise, though. When the player is in range of Wi-Fi, Smart DJ can stream songs right from the Zune Marketplace without the need for local storage. Does this make the Zune HD a more appealing device in your opinion?
The traditional music industry has long been busy building the image of music pirates as scofflaws and reprobates, the type of people that would kick granny to the curb and steal candy from babies; an evil that must be crushed at any cost. Pity the industry didn’t actually expand that same energy trying to understand them as consumers in an emergent marketplace, thus better positioning themselves to meet the needs of that market rather than threaten it with a cudgel.
A United Kingdom research group, Demos, did just that, and surprise, surprise, they discovered that those people who confessed to pirating music were also those who spent the most on music. Pirates spend, on average, $126 per year on CDs, MP3s, and vinyl. Non-pirates (landlubbers?), on the other hand, only spend, on average, $72 per year.
Interestingly, only 10% of the respondents fessed-up to having illegally downloaded music. But, as the study was conducted in Great Britain, where the repercussions for illegal downloading are way more severe than in the United States, it’s surprising any did. (The Performing Rights Society (PRS), Great Britain’s RIAA doppelgänger, is presently pushing legislation to ban from the Internet any one caught illegally downloading music three times--a modern day version of walking the plank.)
Respondents indicated they were willing to buy more music, provided the price is right. It might be that, as consumers, they’ve recognized that downloaded music is a quality notch or two below CDs, and pricing should better reflect that differential. The tipping point appears to be 73 cents, at or below purchasing becomes more likely.
"Politicians and music companies need to recognize that the nature of music consumption has changed and consumers are demanding lower prices and easier access to music,” says Peter Bradwell, a Demos researcher.
As digital music stores become more common and convenient, the age of the compact disc as the preferred medium is coming to a close. In fact, according to year-end sales figures released by The Nielsen Co., sales of CDs are down a whopping 20 percent.
The sales of physical discs have dropped from 450.5 million in 2007 to only 362.6 million in 2008. And during this time, digital album sales made a gigantic jump of 32 percent over their previous year’s sales.
Apple’s iTunes music store has been particularly successful, having broken the 1 billion song mark with 1.07 billion sold. Along with this, their sales went up 27 percent over the previous year.
This holiday season, Microsoft is taking aim at arch-rival Apple's iPod - and its companion iTunes software. This week, Microsoft cut the retail prices on 4GB, 8GB, and 16GB Zunes as well as on the Car Pack, Home/AV Pack, and Dock Pack. With the 8GB Zune now selling for $139 (was $149) and the 16GB model now selling for $179 (was $199), Microsoft is undercutting the price of comparable Nanos by $10 (8GB) and by $20 (16GB). The 4GB Zune anchors the lineup at $99, down $30 from its old price.
The Car Pack now sells for $69 (was $79), but the Home/AV Pack, also formerly $79, is now just $59. The Dock Pack is also cheaper at $39 (was $49).
To find out how Microsoft plans to use Zune software to drive hardware sales, join us after the jump.