Spotify and the Speed of the Social Network

-- By DanielleThomas - 25 Oct 2011

Introduction

Digital music is a non-functional good whose marginal cost is zero. Accordingly in a world without intellectual property’s protections, superior distribution could develop. As suggested in class, the theoretical maximum of this superior distribution would be the speed of the social network. Using Spotify and its connection with Facebook as an example, it seems the music industry is interested in a theoretical maximum of the velocity of the social network rather than the speed of the social network. That is the music industry is interested in both the temporal and "directional" elements of distribution.

Spotify

Spotify is a DRM-based subscription music service. It offers three tiers of service: freemium-which allows a user to stream an unlimited amount of music for the first six months followed by a cap of 10 hours per month and 5 plays per track; unlimited-for $5/month, the user can remove the advertisements littered throughout the freemium version and have unlimited hours of listening; and premium. With the premium version, Spotify allows a user receive music files of better sound quality. Additionally, users can stream not only to their computer, but also their mobile device and even store music for offline listening.

Spotify attempts to fill a niche that other services have not yet reached. It is different than iTunes since you do not have to purchase the track in order to hear the song. Unlike Pandora, you are not forced to listen to a "radio station." However, Spotify does offer a radio station feature that allows users to create stations based on whichever artist or genre they prefer. Furthermore, Spotify has more content than others as it has reached licensing agreements with all the major labels-Warner, EMI, Sony and Universal.

One of the selling points Spotify touts is the social interaction and collaboration. Users create playlists, which they can share by inboxing the lists to other Spotify users they are friends with or share the list by email link. Additionally users can collaborate on playlists allowing each other to manage the content on the list. Users can also share albums and tracks by sending the link in an email, dropping in their friend's Spotify inbox or through social media platforms like Facebook and Twitter.

Facebook

Considering Spotify's emphasis on users collaborating via the social network, its connection with Facebook is unsurprising. Recently many Facebook users' news feeds have been cluttered with posts alerting that a friend is listening to this artist or that playlist on Spotify. Prior to late September, Spotify users had the option to log in to the service with their Facebook account. Now new users must sign up with Spotify using their Facebook account. The rationale provided was "Spotify chose to provide a social music experience to all of its users so it's easy to discover music with friends from the get-go. This is similar to how apps built on Facebook work, such as Farmville and Washington Post Reader, where every user is a Facebook user. When users log in to an app with Facebook, the expectation is set upfront that they will be engaging in social mode within the app.”.

Velocity of the Social Network

The music industry has long cared about numbers, "speed measures" to be specific. For instance: after I released this video on youtube, I received 100,000 hits, 100,000 page views on the band's website, 500 more myspace fans and the like in a span of a week. See here. Such metrics show that an artist's numbers are increasing in absolute terms, but not necessarily on a qualitative or directional level. Spotify, which is being hailed as the next savior for the music industry, is a model that those in the music industry would like to harness for more efficient results in marketing. This would decrease their expenses in marketing, but also potentially increase their revenue through money made off of Spotify. The combination between Spotify and Facebook, used to harness the value of the social network, may reveal a growing shift towards measuring velocity.

Spotify and Facebook undoubtedly keep track of every keystroke and click by each user. The companies are watching for the selections of a Spotify user and more importantly the reaction of the user's friends, which would ultimately provide a greater understanding of who music should be pushed towards. A study recently undertaken by Università degli Studi di Milano revised the notion of six degrees of separation between people to four, at times even three degrees of separation between those on Facebook. This revised estimate not only decreases the amount of jumps that a song has to go through to a listener, but possibly reach a listener that is willing to spend money on a particular artist. Facebook and Spotify are amassing a lucrative bank of data that the music industry would (does?) have its hands on to increase their "efficiency." The major labels would know exactly through what channels, the correct people or tastemakers, to direct their releases towards to improve their sales. According to Spotify's CEO Facebook users are more than twice as likely to pay for music. See here.It provides the direction for the speed of the social network to convert it into velocity. While this was likely always the goal since the start of the music industry, the internet and services like Facebook and Spotify have made it even easier.

I suggested last time that it would be a good idea to structure the essay around the unpacking of a theme clearly expressed at the outset. I don't see that theme announced at the start of this draft, and I believe the remainder lacks for the clarity it would provide.

We are still in a sort of soft-focus Spotify commercial much of the time. All you really show is that Spotify works a great deal less well for everybody except the music companies than the Internet does if you leave it alone. Personally, I can "stream" (which means, "provide a slow download 'just in time' to a running media player program") all my music to myself and anyone else I want, on any kind of device, anywhere on the net, without the slightest effort. The software and hardware needed to do that are free or trivial, and a six year old could set it up. Given that a hard drive costing scarcely more than $500 will hold all the recorded music on earth, a few thousand collaborating people should be able to make it possible for everyone to hear everything they want everywhere. So Spotify, as you show, manages to offer a very much less effective service to a tiny number of people who can afford to pay roughly seven orders of magnitude more than the service is worth, and are stupid enough to do so.

Your apparently careful analytic distinction between "speed" and "velocity" turns out to mean that the DRM on music distributed by Spotify is supposed to keep people from sharing music. Of course, it doesn't. So Spotify, rather than being "the velocity" of anything, is just a backwater where music doesn't move very far, fast or well, and people pay immense amounts of money to be badly served. But music moves throughout the net elsewhere, freely, and is listened to by people who have neither the money to pay Spotify nor the slightest inclination to be cheated so crudely.

(You might also want to deal with the confusion between "maximum" and "minimum" in your opening. I showed in class why the speed of the social network is the maximum speed that can be obtained by proprietary distribution, and the minimum speed of free distribution. At maximum efficiency, the speed of the free distribution network is 1 hop for everything: we would then have perfectly federated distribution of all desired files, so that wherever you are on the net you can pull anything you want from somewhere you don't have to search for to find.)

The real importance of Spotify, as you suggest but do not fully discuss, is the use of Facebook as the advertising medium for this particular form of thieving from the listener. People will not use a service that provides lousy access at an absurd price unless they are fooled into thinking of it as convenient and cheap, which may happen if they are subjected to the peer pressure of seeing their "friends" use it. The bonus, of course, is that usage is fully surveilled and people can be data-mined better. This is the "complement" service provided to someone other than the consumer, who gets the worst of the deal and is fooled into not noticing, along with all the other concealments horrible (and unnecessarily horrible) technology like Facebook makes possible.

So what's the theme? In the conclusion, it appears to be "the music industry has always aspired to the perfection of giving people music without letting them keep it, and Spotify is another effort to achieve that end." But by not stating that theme, if it really is your theme, up front, you deprive yourself of the responsibility for evaluating it. Spotify is only relevant, and indeed that whole aspiration is only relevant, if people are stupid enough to allow it to be achieved. Which of course they're not. The primary problem, I think, is that you don't confront the factual issues. Maybe it would have been useful to explain a little about "streaming." Perhaps it would help to present some information on how technically-competent people who want to have good networked access to their music collections actually do it? If all one's reader knows about is Spotify, it may be difficult for the reader to draw intelligent conclusions.