Piracy and Spotify Are The Beginning Of New Transition

Last week it emerged that people downloading music illegally spend £33 more than legal file sharers on buying music legitimately. So if you are a pirate, you are usually spending more money on music from legal sources than those people who don't download illegal torrents.

Intuitively that makes sense - when you have an opportunity to try out the product, it's more likely that you will buy it - and it must apply to music as well.

But let's dig it a bit more. 

In the beginning man created a vinyl. And it was good. The quality of soft vinyl brought analogue music to the commercial market. Then there was a tape. It changed the market and it was cheap. While you couldn't copy the vinyl, you were easily able to copy the tape, but at the cost of quality. Walkman made the physical music media mobile. It was a great era of physical media. And it was good.

Then, there was a CD and it was more expensive, but the quality was ultimately much higher than tape. And after some time, people started ripping CD's. Tape and vinyl slowly ceased into oblivion. That's how the digital era began. 

Then the iPod and iTunes made the entire music library mobile and accessible immediately. Many people abandoned physical for digital, because they could have everything here and now, synchronised with their portable players. 

But digital music was almost as expensive as the physical media, and people said that it was not good, so they kept ripping those CD's and downloading music illegally. Torrents became standard. The music market profits sinked down to ever-low levels. The music quality was compromised by portability, ripping algorithms and cheap, but instant hi-fi sets. In a hi-end market, the hard vinyl made an exclusive come back, bringing expensive but high-quality analogue medium back in market. But the mainstream was digital, low-end and pirate.

But another transition was on it's way. Spotify. The idea was simple - lets give people all the music available online for free, but once in a while they will listen to 30 second advert. And if they like it, let them pay £5 per month for the advert-free version, with an option to backup some songs on their hard drive to listen offline. And finally - for £10 per month, they will have all the above plus they will be able to get those track on their smartphone or portable player, and backup much more tracks offline.

And so it worked, and people liked it. 

And thats where we are and the new revolution is emerging in the digital world. Spotify is a first step towards new media model, where you rent or stream the content, but you do not own it. This instant, legal, cheap and ownership-free model is ultimately the way we will consume music, TV shows and movies. While Apple understood it, and pursues such idea with it's new release of Apple TV. BBC's iPlayer, Spotify or Netflix are already taking over the market. It will take some time before big broadcasters will realise that this is the future, but we are getting there. 

Ultimately, the TV model will change entirely to streaming. Retail stores will disappear, as user will be able to stream content for free and immediately buy it online with extras and higher quality, either in digital (Spotify, iTunes) or physical (Amazon) format if their prefer. With the increase in digital sale, more hardware will be offered for free as a part of subscription, like it is with mobile phone contracts, or BT, Sky and Virgin Media in UK. This is the beginning of new digital transition.