Spotify will change music this time, sorry Apple

I have been accruing my 60 GB of music for the last 14 or 15 years.  I don’t think I have ever deleted a track in fear I might want it some day.  I have spent many hours making sure they are all ripped at appropriate bit rates and tagged correctly. So you can understand my shock when a friend of mine told me that he was deleting parts of his music collection since he never listens to them anymore.  His rational is that he can just listen to them on Spotify if he gets the urge.  There isn’t any risk in deleting them. I think we are hitting a tipping point where people will rent music instead of buy it.  Spotify’s big advantage is its freemium model (think gateway drug).

In the past, I rarely bought music online since the cd cost about the same and I that way I had a backup that wasn’t compressed.  The instant purchase ability wasn’t that important to me.  What wasn’t there in Itunes that Spotify covers is the ability to find new music and not take a big risk on purchasing it.  Spotify will grow on the freemium model that Evernote has proven effective.  People start using the free version of Spotify and love it.  They share music with their friends, discover new music, all without a risk of buying a CD that they will listen to only a couple of times.  No risk, since there is no cost.  Eventually they will want to take their music with them, and since they already like and and are accustomed to the service, they are in.

Evernote has this model and they offer an excellent free service.  They make a nice profit if only 5% of users go premium.  They have a lot of research which shows the longer you are with Evernote the higher chance you will go premium.  They now just raised over $50 million in funding and they aren’t even using it since they are operating at a profit. Dropbox is another example of excellent freemium, even though I have my doubts about consumers jumping to the premium version.  Maybe they are focusing on the corporate level. 

I never jumped on Rdio or others since there was always a risk if I didn’t like it I would have dropped cash on it.  Freemium seduces you into using a service until you want to give them money to take advantage of more features when you feel there isn’t a risk in purchasing.  The control is all in the consumers hands.  That is why trial periods are annoying, they add a layer of stress to your experience.  The other side is most “free” models have a neutered service and the business is constantly pushing you to go pro.  

Since there is no risk for a great product, people feel great about telling their friends about it as well.  Most companies offer referring rewards, but people don’t care as much about that as they do of their friends perception.  It feels great to refer someone to service that will benefit them and costs nothing.

Spotify is just getting going in the US, but don’t be surprised if it doesn’t pick up traction pretty quick.

Gary Taubes @ Google #4hrbody