Should brands Spotify?

Creative agency Engine claims Spotify is a chance to get back into ‘mixtapes' with friends and colleagues.

Gareth Phillips, MD of Syzygy, says: ‘Spotify is a potential replacement for iTunes: I can use for listening to the music that I want to listen to when I want to listen to it. The technology is less hassle to install than iTunes, with a user interface that's been easily picked up by all the family instantaneously.'
But, more than that, the service offers advertisers the possibility of reaching fans in a certain location or age group or with similar music tastes as the site requires registration details including postcode, gender and date of birth.

Daniel de Sybel, head of technology at interactive agency Media Contacts, is tipping the service as ‘the start of the future of audio advertising'. He says: ‘It is like radio advertising but more targeted and trackable. It offers the possibility of direct response ads for brands.'

Spotify founder Daniel Ek claims the service will be profitable by the end of the year. But some argue that ad revenues for the site and the number of users prepared to subscribe will be too small.

George Nimeh, managing director of Iris Digital, says the subscription rates are not high, meaning that more people could opt for the ad-free model. But, he adds, this would be dependent on Spotify's ability to increase its selection of tracks.

He warns that it has ‘narrow appeal for brands' except for music and entertainment brands.

He points out that the deal to allow users to listen to U2's new album on Spotify was ‘a no-brainer' to create buzz in advance of the album's official release.

Nimeh says the service is creating so much buzz because ‘the world is waiting for a credible iTunes killer'. He adds that Apple's iTunes has credibility with consumers but that it is ‘clunky' and difficult to navigate.

The service is also being welcomed by the music industry as a viable competitor to illegal music downloads. By making legal tracks free to access it aims to encourage people not to opt for illegal music file downloading. It has already got record labels including Universal Music Group, Sony BMG, EMI Music, Warner Music Group, Merlin and The Orchard signed up and is adding 10,000 tracks a day.

But according to new research from Tiscali, illegal downloading is not likely to fizzle out anytime soon. In a study conducted on the tiscali.co.uk music channel, nearly half of respondents (46%) know that illegal downloading is damaging to the music industry but they still do it because they say there is no incentive to make them stop.

Whether free, accessible music services like Spotify are incentive enough, is yet to be seen.