Spotify could be gone within a year, according to a senior executive at one of the world's largest music groups.
The Times is reporting that the anonymous source has said: "Spotify will be dead within a year if it carries on like this," after questions were raised over whether Spotify could continue in its current guise.
Founder Daniel Ek has also written to The Times, urging music labels to re-think the 'pay per play' model currently imposed on the streaming service, believing the royalties being asked are unsustainable.
"I believe this is something that most people in the industry can agree to, but it can't happen if the industry continues to enforce the per-play fees it has tried so hard to hold on to," said Ek.
"The new model is about figuring out how to increase the revenue per user between the different models, not squeeze as much as possible out of every single transaction."
Time needed
In the letter Ek said he believes the company should be given more time to prove itself as a business model, instead of asking for overnight success based on its popularity.
"It would obviously be wrong for me to compare Apple's success with iTunes to Spotify. We are two very different companies in two different phases of a company's cycle."
"I'm also very aware (and we are regularly reminded) of the digital music graveyard where many start-ups are to be found dead and buried. Yet whatever the business, big success takes years to build and there are very few counter examples."
New branches
However, it would be wrong to assume that Spotify is simply going to continue online growth and simply hope it eventually becomes profitable.
In the last few months, the music streaming service has launched a mobile portal on the iPhone and Android phones, and has recently announced a deal to bring Spotify to TVs as well (in Sweden, although the expectation is it will extend to other countries too).
While the likes of Twitter and Spotify are very much in early investment cycles, their success has increased calls to show how they will be self-sustaining. Whether Spotify can buck the trend and become the beacon of the new internet-based models remains to be seen.
Your comments (3) Click to add a new comment
avi
October 10th
3. Record companies ruin everything and make themselves figures of hate in the process. They are greedy and inefficient and will pay the price in the end.
Look at the way they got that nitwit Mandleson pleading their case and as long as gullibly sap politicians like him abound, they'll have the confidence to keep trying to rob us.
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cannonfodder
October 9th
2. removing ownership and pay per use is what the corporations want, this can clearly be seen with Sony's PSP Go, they are bringing these anti consumer tactics into the mainstream.
lets hop spotify fails & all other anti-consumer licensing bull that removes our ownership.
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mattdoc30
October 9th
1. I think the Music industry are mad if they believe that things can carry on as they are. Whether they believe that pay-per-play is fair or not the market place has changed and new services like Spotify and Last.FM are the future. These types of services will likely bring Piracy to nothing particularly as they become more compatible with different platforms.
The music industry should see what their customers want and react, like every other good company in the world. Move on and with the times!
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