A post from the Guardian reports that music-streaming service Spotify will be providing analytics to artists in order to help them earn money from having their music hosted. The post says that the analytics will offer up data about who streams artists’ music, and wants to use that information to “help them sell merchandise from their Spotify profiles.”
The news comes just a day after word got out about Apple’s acquisition of Twitter analytics company Topsy Labs, which could be used to help Apple sell ads on its own foundering iTunes Radio service. Spotify has teamed with a company called Next Big Sound, which will provide artists regarding stream data—things like “track-by-track information and demographic data including gender, location and age.” That kind of information could be extremely valuable in terms of targeting ads and merchandise to certain listeners—though whether this initiative will be enough to make Spotify profitable remains to be seen.
That’s because despite fact that “Spotify” has earned the kind of brand recognition formerly enjoyed by the likes of Pandora and iTunes, the company’s been coming up short in terms of actually turning a buck on its ad-supported and subscription-supported music streaming service. The post points out, “even with a recent $250m funding round, Spotify has yet to prove that it can stay in business long enough to reach [its projected goal of 140m total users and 40m paying subscribers].”
So why can’t Spotify get the job done? Well, for one, making money in the music business is generally a bit tough in the first place. But even worse is the fact that the business model Spotify relies on—music streaming at low- or no-cost for its customers—means that someone is going to lose out. You can’t give something away and be surprised when you don’t make money. Even selling ads is a limited strategy. It’ll be interesting to see whether or not the use of analytics will help win artists over to Spotify’s services. Color me doubtful.