Last night I attended the event organised by the Scottish Society of Computers and the Law entitled Copyright law and market economics: who does the dancing and who calls the tune? with Will Page, chief economist for PRS, and Niklas Ivarsson from Spotify (I don’t need to link to Spotify surely).
Will Page starts the event showing a chart which displays music sales, which peaked at around 2001, and have been in decline since; the interesting thing is that they do not match piracy hikes, then surprisingly he shows that diminishing sales can be attributed to the fact that more people are buying “singles” and less people are buying albums. Other factors contribute, but to blame file-sharing as the sole culprit is wrong. He then offers the amazing example of Radiohead’s In Rainbows, which was available for free in Radiohead’s own site for two months, yet it was still widely shared in P2P sites. “Popular is popular”, if you are popular in file-sharing sites, you are popular in commercial outlets.
The cause for reduced sales is not only piracy websites. Example: Gossip Girl was not that popular on TV, but popular on CW’s own webcast site. When it got pulled from webcast, piracy figures sky-rocketed. Another example of popular is popular, Lady GaGa was popular on CD sales, iTunes, and PirateBay!
Is it possible to return to the golden era of 2001? In 2001, 55% of the population bought music, today only 40% purchase music. Consider that 2.7 million people are using Spotify in the UK, yet Spotify spends only € 20,000 EUR in advertisement. Do people consume music differently in Spotify? Will Page then discusses the Long Tail, which promised us an environment that would democratise usage figures. However, the Matthew Effect is really taking off in Spotify, the popular artists are getting clicked more, so the gap between the rich and poor is widening, the rich are getting richer. Does this mean that the Long Tail is dead? We are entering a situation that reminds me of “winner takes all” scenarios. So for example 4.5 million tracks are available in Spotify, but only 3 million of those are clicked. Democratising demand? Users seem to only want to consume the same things over and over again.
Niklas Ivarsson from Spotify. Cloud computing is the future, the URL is the new MP3. The deepness of the catalogue is very important, people are listening to stuff that they already have in other formats. Usability is key. “We are just off the starting blocks, this has growth potential”. Spotify has several advantages over file-sharing from a consumer and user perspective, for example, tracks are loaded with metadata, so identification of what is popular becomes easier. Ivarsson tells us that Spotify’s business model is monetisation that comes from scale and advertising, same as Google. Targeting in an online world is more effective than other services. The most important data of the entire presentation was that Spotify’s user surveys prove that 2/3 users have reduced their file-sharing behaviour due to Spotify.
I have to admit that I was a bit underwhelmed by Spotify’s presentation, it was a sales pitch.
This was an excellent event as a whole, and one that follows the great tradition of good presentations by the Scottish Society of Computers and the Law.