Music Ally

Customers of Finnish ISP TeliaSonera will be able to get Spotify through their TVs this summer, as part of an exclusive  marketing deal signed between the two companies.

TeliaSonera will be Spotify’s exclusive retail and marketing partner in Finland for its Spotify Premium service, offering it to its customers on computers, mobile and TVs. The latter will be via Sonera’s new Sonera Home TV IPTV service, which launched today. Spotify will be part of it by summer, the company says.

“TeliaSonera is a key partner for Spotify in Scandinavia and together we’re helping increase the digital music market. Sonera’s strong market position will allow us to reach out to many more Finnish music fans than ever before,” says Spotify CEO Daniel Ek.

“We believe that right now new services that provide innovative features for TV and music will be one of the most in-demand additions,” adds Sonera’s VP of TV services Jussi Salminen.

Spotify has been clear in its view of TV as the third leg of its distribution strategy, alongside PC and mobile. The partnership comes hot on the heels of a BPI-commissioned study claiming that more ISPs should launch digital music services.

The controversy from WMG’s recent comments on free ad-supported music services – as well as NPD’s research on cannibalisation of downloads – continues. Spotify boss Daniel Ek has once again defended his company from such accusations, speaking at a Financial Times conference in London.

“What a lot of people in the music industry talk about is cannibalisation – getting the most profitable customers to become free users. That obviously doesn’t work. But we are convinced and seeing a lot of research that actually we are doing the opposite: we are taking pirates and moving them into a legal service.”

Ek also says that labels are starting to see the financial returns. “We are already one of the biggest accounts for many of the labels. At the growth rates we are having now, we are probably going to be one of the top four accounts globally for many of the record labels.”

NPD Group analyst Russ Crupnick’s presentation at the Digital Music Forum East conference this week is already raising hackles, thanks to its claim that free on-demand music services reduce paid downloads by 13%, while online radio sites boost them by 41%.

Media reports have turned this into a Spotify v Pandora face-off, which is bizarre, given that NPD’s data is based on the US market, and Spotify hasn’t launched there yet.

Even so, the company is being asked for its views on the claims, and has told FastCompany that “there is other data out there to prove the exact opposite of that report… Spotify is not just about downloads. We’re generating a mixture of revenue which includes downloads but also ad sales and subscriptions both of which are growing rapidly.”

That’s one of the problems with the conclusions that have been jumped to on the back of NPD’s research. Increasingly, free on-demand streaming services are about driving paid subscriptions, NOT paid downloads. In other words, a better way to gauge their success in a year or so’s time will be their effect on overall revenues to the industry, rather than on one particular category of digital music.

Is Spotify just about streaming music? It seems the company has ambitions in the music videos space too. The company is running its first full-length music video today: an exclusive for Jimi Hendrix’s cover of venerable blues track Bleeding Heart.

It’s part of a promotional campaign from Sony Music for a new Hendrix compilation, and the Spotify homepage will be reskinned to trumpet the exclusive.

So in that sense, it’s more an extension of the company’s advertising strategy than a full-scale move to compete with the Vevos and YouTubes of the world. Spotify tells us that because the video is effectively an ad, it’ll only be seen by free users of the service – premium users get Spotify ad-free.

However, Spotify Premium users will get the album to stream exclusively from next Thursday, a few days ahead of its official release.

The video will be available in all six of Spotify’s markets from today, and as Sandbox explains, it involves re-imagining a Hendrix performance at the Glastonbury Festival – complete with a cameo from festival boss Michael Eavis. UPDATE – here’s a screenshot of the reskinned homepage (click for larger).

Sorry, not that Apple. Not the one led by Steve Jobs (is it any wonder that the names of all his products start with “I”?) Instead we mean Apple Corps – the music company founded by the Beatles. US innovation and business magazine FastCompany has rated Apple Corps as the second most innovative music company after Spotify, largely because of its involvement with The Beatles: Rock Band but also because of its Las Vegas collaboration with Cirque de Soleil entitled Love.

Sure, it’s true that at the end of last year the Beatles and EMI released 30,000 apple-shaped UB drives containing remastered audio of 14 albums. But it is more than surprising that a band whose material isn’t available even on iTunes, let alone Spotify, might get lauded as digital visionaries.

WMG boss Edgar Bronfman certainly stirred up a hornet’s nest with his comments on free streaming services this week. Spotify issued a statement (via Twitter) saying that “To be clear WMG is not pulling out of Spotify. Media is taking things out of context”.

But actually, that’s only half true. Here’s the specific Bronfman quote from WMG’s earnings call: “Free streaming services are clearly not net positive for the industry. And as far as Warner Music’s concerned will not be licensed. So this sort of get all the music you want for free and then we maybe we can – with a few bells and whistles move you to a premium price strategy is not the kind of approach to business that we will be supporting in the future.”.

It’s true, Bronfman didn’t say WMG is pulling its catalogue from anyone. Yet. But it’s hard not to read his description of free services with ‘bells and whistles’ as anything other than a reference to Spotify. He likely had the service’s US launch in mind, but it’s not taking anything out of context to wonder what will happen the next time the two companies’ licensing deal is up for renegotiation.

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Spotify has been lauded ever since it first launched for the simplicity and slickness of its user interface. Its desktop client is stripped down and easy to use, and even the more complex features like collaborative playlists are idiot-proof. It just works.

Yet in early 2010, questions are being asked about whether it works well enough, which is healthy for music fans, the music industry and for Spotify itself. The company hardly rested on its laurels in 2009, but attention is turning to what it needs to do now to improve and compete with the new breed of ‘post-Spotify’ music services that will spring up this year.

(Sorry for saying ‘post-Spotify’ – it’s a bit pseudy).

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Spotify has announced that it’s launching new artist discovery features in its desktop client, including a new Related Artists tab to help users find more music they might like.

It’s based on a recommendation engine built in-house by Spotify’s R&D team, based on millions of user listening hours. It replaces the existing recommendation system, which was provided by AllMusic.

“Artist recommendations have been fine-tuned meaning music fans can now dig down much deeper into the Spotify catalogue,” says project leader Erik Bernhardsson.

“Improving the way in which Spotify users can discover exciting new artists and music in general, such as by sharing playlists, will play a vital part in Spotify’s continuing evolution. This is only the beginning.”

It’s a necessary development, it has to be said. Spotify has traditionally been more about on-demand access to albums and songs, and less about recommendations and social features. However, it’s facing competition from a new breed of services – MOG for example – that aim to offer both sides of the equation.

On Saturday, MySpace CEO Owen Van Natta revealed that more than 180 million playlists have been created on MySpace Music. Well, Spotify is hot on its heels: yesterday, its CEO Daniel Ek revealed its own playlist stats, based on just six countries in Europe.

“Right now we’re almost close to 100 million playlists on our users, and 30% of those are albums,” he said. “People do actually listen to albums, and they’re storing them.”

Ek also said that Spotify doesn’t differentiate between its ad-supported and subscription business models – they’re wrapped up together, along with revenue from downloads.

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Spotify’s UK boss Paul Brown confirmed the latest stats on the streaming music service’s growth in Europe at MidemNet today, saying that the company now has 250,000 paying subscribers across its six European markets.

However, he also said Spotify’s ad-supported revenues are increasing thanks to its 40-strong sales team. Ads are now “a double-digit million Euro business now on its own”. Brown was speaking during this afternoon’s panel session on labels and services.

He also addressed head on the concerns around Spotify’s business model, saying the company isn’t just chasing user growth for the sake of it.

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