Spotify plans to bolster its existing premium service with a range of value-added services in a bid to get fans to pay for content.
The music streaming service hopes to convert its 1m users to a premium subscription by offering extras such as mobile and living-room access, higher quality streams, bundled downloads, recommendation, ticketing and social features.
Spotify’s UK MD Paul Brown told new media age the music service must offer a compelling experience, beyond simply stripping out ads, in order to grow subscriptions.
“The idea is to have a service with more features and functionality that will draw people in,” he said.
Brown, formerly international MD of Pandora, said a rich collection of premium services was set to be ramped up over the next few months, backed by marketing efforts.
“The way I see it happening for us is to create value by being a hub that has great channels, great things to do and a great music listening experience across lots of different platforms,” he said.
The move comes as Virgin Media this week announced plans to offer its cable and broadband subscribers a music subscription service with Universal Music. For ‘less than the cost of two CDs’ each month, consumers will be able to download unlimited MP3s to own.
The ISP said it would temporarily suspend accounts of subscribers caught sharing files, in an attempt to stamp out piracy and encourage consumers to pay for content.
Jon James, broadband director for Virgin Media, said ISPs were well positioned to offer music services. “We increasingly give our customers more than just broadband, acting as a natural hub for entertainment,” he said. “We’ve invested heavily, primarily as a retail play but also to showcase our fibre-optic network.”
Francis Keeling, VP of digital at Universal Music, said as ISPs evolved into entertainment companies it made sense to work together on retail and combat piracy. Last year Universal agreed a deal with Sky to develop a music subscription service, but this is yet to launch.
“If the ISPs convert a decent percentage of their customers to subscription, we’re in a really good place,” said Keeling. “There’s a risk of cannibalisation of sales, though, so it only makes sense to do deals if we can get really good scale.”
Despite welcoming the emergence of more services, music subscription service Napster warned ISPs must fix deals with all the major labels or risk offering a poor experience.
Thorsten Schliesche, VP of sales and marketing for Europe at Napster, said the subscription model could be damaged. “The worst case is if Sky and Virgin only launch with Universal Music so the first experience for the customer is that not all content is available,” he said, adding there was a danger of ISPs feeling pressured to launch music services by the Government as it tackles piracy.
Steve Mayall, director of music consultancy Music Ally, said ISPs would look to offer music services to combat churn but they must differentiate and add value.
“Overwhelmingly people want to get music via their ISP because it’s a source they’re already familiar with,” he said. “They won’t compete with iTunes with an à la carte store, but if they launch something different then it could impact on piracy and see more money coming into music.”
