spotify

There are few things that we at ELTjam enjoy more than mining Spotify’s immensely rich seam of content in an on-going quest to discover, share and devour copious amounts of well-crafted music. Spotify is on our desktops, laptops, phones and tablets; synced, sorted and ready to respond at any moment to a sudden musical impulse.

For those of you not familiar with Spotify, I’ll do my best to keep my gushing to a minimum in my description of it. Spotify is a web and mobile app that enables the user to search through millions of tracks from an enormous catalogue of artists. The user is then able to stream the music through their device, rather than purchasing the music and downloading it for keeps. Think iTunes’ music archives meets YouTube’s content delivery model.

Costs? It’s available for free on both mobile and web app as long as you don’t mind having your listening interrupted at regular intervals by adverts. The premium account gives you unlimited, uninterrupted listening privileges as well as the ability to listen to the content offline. This means that you download your chosen songs to your device-of-choice for access anywhere, anytime. Again, you won’t have purchased those tracks in the same way you would from iTunes; you don’t own them. You do own the right to access them … for as long as you pay your subscription at least.

There. Spotify described and virtues modestly extolled.

This post is interested in what ELT as an industry might be able to glean from Spotify’s MO and, interestingly (given previous posts and discussion taking place on the blog), we find ourselves talking about royalties. Spotify has been taking a lot of criticism in recent years for the model it employs in calculating an artist’s royalties. This is fairly understandable; there’s no real purchasing transaction taking place, as mentioned above. Intellectual property is not being traded, rather leased. The company has made public its formula for arriving at what an artist sees on their royalty cheques, and it’s far from simply being calculated on a simple ‘per-play’ basis. Instead, an artist’s royalties are dependent on the following variables:  the country in which people are streaming the artist’s music, the number of paid users as a percentage of total users in the territory, the pricing/currency value in the territory and an artist’s royalty rate with their label/publisher.

The result is that an artist can expect to earn somewhere between $0.006 and $0.0084 each time their song is played. Not a great deal, admittedly, and considerably less than Noddy Holder would expect to see arriving in his bank account every quarter. Radiohead’s Thom York publicly railed against Spotify’s apparent neglect of the artist in its business model by referring to their payment policies as ‘the last desperate fart of a dying corpse’. But if you take into account that a certain strata of artists on the platform is getting plays in the tens, if not hundreds of millions, then those paltry-looking payouts take on a whole new lustre. In fact, the company has paid out over $1 billion in royalties, $500 million of which were in 2013 alone.

So what can we learn from this? In a recent interview with Wired magazine Spotify’s cofounder and CEO, Daniel Ek, described his company’s mission in a way that seemed to resonate with some of the challenges and opportunities that are presenting themselves in the ELT industry. Firstly, Ek’s creation of Spotify was a continuation and evolution of how users were behaving in terms of their contact with the media they wanted to enjoy. By Spotify’s initial launch in 2006 file sharing platform Napster had been legally challenged and shutdown, and the iTunes store was demonstrating that music lovers were prepared to forego the physical object of the album; they just cared about the content. (Interestingly, before its courtroom demise, Napster was recognised as contributing to the chart success of Radiohead’s Kid A album due to the fact that several tracks from the album were leaked months in advance of it official release.)

Spotify seized the opportunity to cultivate that shift in music consumption by convincing record labels to sell access to their content rather than the shiny discs and inlays that they were producing in limited numbers to be displayed on shelves. This model has undoubtedly struck a chord with music consumers globally, as evidenced by the 24 million-strong usership and the fact that the company is experiencing annual growth in excess of 100%. As the user-based continues to grow, so does the artist royalty at the end of the formula.

Of particular interest is the fact that record labels have been gradually responding to this cultural shift, as Ek says in the Wired interview, ‘They are just waking up to what’s happening, but as with any large corporation they face the innovator’s dilemma’. Some labels, as Ek observes, are beginning to be more proactive and are creating their own Spotify playlists that include music from other sources rather than just their own in order to generate more interest.

Rather than focussing on how people consume music, Ek wants Spotify’s lasting contribution to be to change how artists create. With millions of users worldwide providing a living and engaged canvas for artists to experiment on and get feedback from, there is going to be a dramatic shift in how music is created and developed. Artists would be able to trial new material, share work in progress or release various iterations of album content to gauge the cohesion of their creative concept. Similarly, users would feel more connected and invested in the music they enjoy and the artists they follow.

How could this be applied in the ELT industry? Could content creators release iterative versions of their content in exchange for immediate and globally dispersed feedback? Learners would be able to contribute to the ‘sound’ of the learning content being created and shared by becoming vocal and vital partners in the transaction. But, as demonstrated above, with royalties being so dependent on the sheer numbers of subscribers, would ELT content creators ever see this model being more profitable than the traditional model, or will their hard work be sold for a song?

21 Comments

  1. I wouldn’t quite agree – I would say that ELT publishers built their business on skilful adaptation of the content, not on its scarcity. There’s been a wealth of free content available, but learners need somoeone to lead them through it so they actually learn something along the way.
    While unlimited supply of music might make sense to a music fan – though, as I wrote above, Spotify supposedly hasn’t made a profit as of yet – I would say that unlimited supply of learning material is useless to an average student. They need the content formatted to their needs, and in this respect I don’t think we’re in for a big change.
    ‘Selling experiences and results’ sounds great but it’s vague – ELT publishers and teachers have always been providing learners with experiences, so it’s nothing new, it’s just that hopefully new technology would make language learning faster and more enjoyable.
    And results – they mean so many things to different people and depend on so many factors, that the only way to demonstrate that the given company delivers results it promised is for them to devise a framework against which these results would be measured. So, again, it’s nothing new, it’s just marketing?

  2. All the ELT publishers, big or small, have built their business on the scarcity of any kind of content (Texts, images, video, voices,…) and charge teachers, schools and learners, high prices accordingly.
    Spotify has built its business on the basis of an unlimited supply of music and songs.
    New business ventures in the ELT field will also have to take into account this new reality. That means that publishers will have to sell experiences and results to learners if they want to thrive in this age of new abundance.

    1. Having worked for commercial (for profit) as well as non-for-profit ELT publishers in the past, my experience is that creating new content is much more expensive than adapting existing content. It requires a different approach, and greater and varied types of resources, processes and systems. However, I believe that the main issues and problems that new business ventures in ELT need to solve, are intrinsically related to the fragmentation of content formats as well as the ever increasing amount of delivery mechanisms. While end-users may have the desire to make their own choices from this vast pool of options, at some point they are going to need some type of guidance and support. I believe that the role of the teacher will not be replaced, but rather re-placed (re-positioned) to assist the learner in making these types of choices. There is plenty of room for trying and testing new models, but we need to apply the learning of those experiences to improve upon them in an iterative process.

  3. I am not sure Spotify is able to ‘change how contributors created content’. I realise Mr Ek wishes they could but from an artist viewpoint I can’t really see the point of sharing ‘work in progress’ on Spotify – I’d rather do this on my own website where I could have some feedback from my fans, as I assume this would be the point of sharing ‘work in progress’. I don’t think Spotify gives you any sort of feedback on your content except for the number of plays? Also, I am not sure if artists would readily confess that they ‘wrote this song in this way because it’s what people demanded on Spotify’? Spotify does affect content distribution, but I don’t think it will affect content creation in a meaningful way – does it really offer any tools that artists haven’t had so far?
    Also, another controversy surrounding Spotify’s model it’s that they have never made a profit so far?

    1. Pawel, thank you for this intelligent post. I think we all get so caught up in the romance of new ideas, and intoxicated by the very concept of future change, especially when such sexy terms as ‘experimentation’ and ‘ creative collaboration’ are used, that we typically forget to ask ourselves how this will actually work.

      You are absolutely correct in noting that Spotify is a poor tool for collaborative creation, as fans can only endorse through listening to the music: there aren’t any feedback tools. In this sense, the oldest of old methods – playing to a live audience – would be so much more effective, because the artist can physically see and feel the response of the audience, and talk to them afterwards. A bit like a teacher experimenting in a classroom, really …

      Additionally, new delivery and feedback mechanisms do not in any way guarantee creative or novel content – you can employ state-of-the-art distribution and communication tools to test or promote derivative and cliched materials, ad nauseam: we hugely underestimate the potential of new media to reinforce old preferences. In fact, one of the most interesting (and defining) features of edtech is how ‘potentially’ exciting, high-tech tools gel so easily with conservative agendas and deeply behaviouristic methodologies.

      But, here’s the thing. Given that teachers (as well as rock bands) have been able to exploit technology to initiate dialogues with customers/learners in the interests of experimentation, innovation and content development for nearly a decade now, shouldn’t we be asking why they haven’t done so? Hence, the responsible question (in my opinion) is not whether ELT will become like (or learn from) Spotify – but, rather, why hasn’t it? And not ‘How will edtech change the educational environment?’, but ‘Why hasn’t it?’

  4. Thanks for the reply, Scott.

    I completely agree with your point about breaking educational content into discrete, individual chunks. The aspect of the Spotify model that I was finding particularly compelling, however, was the fact that it had the potential to change how contributors created content, rather than how users would be consuming it. In an ELT context, would such a platform motivate content creators to be more experimental, or to develop learning content in new ways?

    I like your point about pre-packaged learning items that would help counterbalance the apparent lack of cohesion; learning journeys that are compiled into ‘albums’.

  5. Ha! Ha! And teachers would be building their students’ playlists. On the other hand: which would you prefer – a classic Beatles track or an utterly forgettable boy band hit?

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