Ten years of Spotify: Pioneer of the streaming revolution

Listening to exactly the song you want, anytime and anywhere? That used to be unimaginable. Teenagers once spent countless hours in record stores discovering new albums. If a favorite song came on the radio, it was frantically recorded onto cassette. And the regular pub was not infrequently chosen for the best jukebox. But then came the Internet, which completely turned the music industry upside down.

It wasn't until the invention of the MP3 format in the 1990s that all music ever recorded could end up on the Internet - as a pirated copy past the once overpowering record companies. The music exchange platform Napster became a symbol for the new era. When the industry's business model seemed to be evaporating into thin air, Apple came to the rescue: the iPod player and iTunes downloads for 99 cents per song convinced consumers to pay money for music again. At last, buying legally was as convenient as only pirating had been before. The next step was streaming, where tracks don't even have to be stored on the device, but are played directly from the web. And the success of this model is inextricably linked with the name Spotify.

The start-up from Sweden, which went online in several European countries on October 7, 2008 following a deal with the music companies, was by no means the first streaming service. Platforms like Rhapsody or Napster, which was reborn as a legal offering, had already been trying to establish the model for years. The idea of getting access to catalogs of millions of songs for a monthly fee seemed attractive, but was held back by implementation problems.

In the right place at the right time

But Spotify launched at exactly the right time: Apple's iPhone paved the way for the smartphone as a ubiquitous mobile computer - and the expansion of the mobile Internet provided the constant connection. Nevertheless, the company from Sweden had to overcome a lot of resistance.

A central point of contention was that founder Daniel Ek believed in a so-called "Fremium" model: On the one hand, Spotify can be used for free, even if you have to put up with commercial breaks and restrictions on skipping songs. But there is also a paid version. Ek's thesis is that a free model can initially attract users to the platform and, over time, possibly convince them to pay for a subscription. The music industry, scarred by the trauma of rampant online piracy, was initially uncomfortable with this approach.

For the concept also meant that artists and music companies had to be patient and make do with meager revenues from the free version of Spotify for years. Musicians like Talking Heads frontman David Byrne and Radiohead's Thom Yorke complained about meager compensation for millions of views, and Taylor Swift temporarily withdrew her music from Spotify to media attention.

83 paying customers

In the long run, however, Ek should be proven right: Spotify now has 83 million paying subscription customers and 180 million users in total. This makes the Swedish service the clear number one in the streaming business - ahead of Apple, which, driven by iPhone market share, has more than 50 million subscription customers even without a free version. Thanks to the success of the streaming offers, total consumer spending on music is also growing again after a dry spell lasting many years.

According to a recent study by the IT association Bitkom, one in two Internet users in Germany currently streams music; among 14- to 29-year-olds, the figure is as high as two-thirds. Five years ago, music streaming was still a fringe phenomenon in Germany. At that time, only one in ten Internet users used such services.

First refused, now in after all

Accordingly, it took a long time for the market to change in Germany. It wasn't until this summer that streaming generated more money than CD sales for the first time. According to figures from the German Music Industry Association, services such as Spotify, Apple Music and Tidal posted a 35.2 percent increase in revenue to 348 million euros in the first half of 2018. Streaming thus came to a market share of 47.8 percent. At the same time, the CD business slumped by 24.5 percent to 250 million euros. In Sweden, the home of market leader Spotify, streaming has already been the top-selling segment since 2012, and in North America since 2015.

For years, many German artists also refused to offer their music on streaming platforms. Gradually, artists like Die Toten Hosen and Herbert Grönemeyer realized that they also needed to rely on these digital channels. As one of the last German bands, even Die Ärzte now announced: "In order to ensure a global, all-day supply of genuine Die Ärzte music in the future, we will also offer all non-prohibited Die Ärzte albums for streaming from November 16, 2018."

But they also still rely on the good old sound carriers: "Since we still care about the beauty and feel of our works, there will of course still be CDs and vinyl records (those big, heavy, round, black discs with the weird decorative patterns on both sides)." (SDA)