the basic problem is that the price is a fraction of what it needs to be to compensate the artists. with the price that spotify pays out, you'd have to listen to a record every day for a year to get a dollar to the label on it, which is going to be less than that to the artist.
the idea of access to a giant database of music is a good one, but in order for the revenue stream to get to where it needs to be some combination of the following things are necessary:
1) you need to cut the labels out. spotify is now the label. it's releasing, hosting and distributing. as it is, what spotify is doing is both decreasing the price and adding another middleman. that's economically impossible. in order for it to be sustainable, it needs to replace the existing middleman and work directly with artists.
2) there needs to be different pricing options, connected to how much is actually being listened to. $120/year is simply not enough. $120/month is more like it. plenty of people pay something close to that for cable. there's just as much content being delivered, and many more people that need to get paid. cable-like pricing options are required for this service to succeed.
3) one of the pricing options should be per-stream pricing, and at rate close to $0.10/stream. if you do the math, you'll see the dramatic disconnect between what it needs to be and what it is now.
there's a lot of rhetoric about how artists need to conform or get out, but that's not the way it's going to be. spotify needs content to work. if it doesn't increase it's price, artists are going to slowly start leaving. taylor's high profile and everything but she's not the first one out - and i'd expect people will follow her out. it may take another quarter or two, but this free lunch just isn't sustainable, and it's not going to happen.
the part of the catalogue that is safe is the old stuff that the labels own outright. the boomers don't have much time left, so this is about to explode - floyd, beatles, zeppelin, etc. jazz. classical. elvis. etc.
unless a tactic is developed for consumers to pay more into it, this is the future of spotify - an archive of recordings by dead people.
as it is, they basically did everything wrong. if this model does pick up, and it will if it's done right, it's almost certainly going to be through a different service.
after looking into it a bit more, i'd put my money on google driving spotify to bankruptcy.....
