Spotify is trying to convince Wall Street that, now, the music is streame

This Tuesday, the Swedish online music listening service Spotify makes its IPO in New York. An operation in the form of consecration for this mode of distribution, which transforms the music market.

Spotify's marketing boss, Daniel Ek, in front of investors, on March 15th.
Spotify's marketing boss, Daniel Ek, in front of investors, on March 15th. © AFP / Ilya S. Savenok / GETTY IMAGES NORTH AMERICA

Just twelve years old (it was created in 2006), it is now considered by specialists as the only European group of media with a global reach: Spotify is the number one start-up in the field of streaming musical, with 71 million subscribers (pay) and $ 4.8 billion in revenue, and even more free users whose use is offset by the ad, for a total of 159 million active users.

The Swedish group, which claims to have paid 8 billion euros to artists on December 31, is still not a beneficiary: despite a 38% jump in revenues in 2017 compared to 2016, the company has incurred losses of 1.24 billion euros in 2017. Its listing on Tuesday on Wall Street, should allow it to increase its capital.

Streaming slows the agony of the music market

If Spotify grows out of Wall Street, it will have succeeded where one of its main competitors, the French Deezer, failed: in 2015, the French company intended to raise 300 million euros by going public. A few days before the formalization, she was retiring, failing to find enough investors. And for good reason: in the meantime a new major player had made its first steps: Apple, which launched its own service, Apple Music, with the advantage of being installed by default on any device of the brand to the apple, from Mac to iPhone.

Today, the music streaming landscape is shared between web giants who want their share of the pie (Amazon Music, Google Play and Apple Music), and specialized start-ups (Spotify and Deezer, so, but also the most audiophiles Tidal and Qobuz). By grouping their efforts, these companies have managed to accomplish a feat: to curb the tumble that was thought inextricable of the music market. In France, for example, in the last two years, the number of music sales has picked up, boosted by the growing number of subscriptions to paid streaming services, Spotify in mind. Streaming is now 42% of the French music market.

A "stabilized" ecosystem?

After years of searching, between actors who wanted at all costs to save the CD in the face of the copy, then those who bet, to counter the peer-to-peer, on the dematerialized sale of protected files (the famous "DRM ", which prevented you from exchanging your purchased MP3 files, did not last very long), streaming seems to allow the music market to "stabilize" today, according to economics professor Olivier Bomsel.

And at the same time, this central place of streaming in the music market forces all market players to rethink their economy, far beyond the issue of subscriptions. On the remuneration of the various speakers on the production of a song, the system becomes more complex: on the one hand, notes Olivier Bomsel in his analysis, because the number of people and functions working on the same album can vary, depending on the nature of the production (it is easier today to self-produce and send his music on Spotify), but also according to the musical genre (hip-hop has its own business "beatmaker", " punchliner ", etc.).

New rules

On the other hand, the calculation of the remuneration is brought to change drastically (if it did not already) with the arrival of the listening on demand, title by title, totally volatile. Where the number of discs sold was the base until then (it did not matter if the disc bought was listened a thousand times or remains in its wallet forever), it is the number of tracks tracked, traceable with precision, which counts. According to a study published at the end of 2017, this trend had already had an influence on creation: instrumental introductions tended to shrink, to encourage the listener not to zap.

Finally, the promotion and distribution of artists will also be brought to revise its model: where the objective of the record companies was until then to make the most possible passages in radio, it is now the recommendations and playlists which are becoming more and more popular. An unknown title that ends up, for example, in Spotify's weekly selection, can be propelled in a few days among the most listened titles. Not to mention the place of more important artificial intelligence, programmed to offer the listener new titles … calibrated on what he already likes to listen.