Posted by Newspaper executives often hold up Spotify as a shining example of success in a subscription-based model. Will Page, former Spotify Chief Economist, notoriously stated to FIPP: “Honestly, when I learn of subscriber acquisition and churn rates in newspapers and magazines I feel like I’m going to faint. Some titles celebrate adding 100,000 new global subscribers in a calendar year as a record-breaking success; well Spotify adds that in a single day! On churn in newspapers, you get promoted if you can get it down to 25%. It’s jaw-dropping and often makes me wonder if these organisations should reallocate resources to fix churn as opposed to maintaining acquisition levels.” (source)
However, this admiration rests on a flawed comparison. Newspapers and Spotify aren’t comparable; rather, Spotify’s business model is more akin to that of an aggregator.
To illustrate, if Spotify were analogous to the Washington Post, you’d only be able to listen to music from one label, like EMI or Capitol Records. Conversely, a subscription to the Washington Post doesn’t grant you access to articles from other newspapers like the Seattle Times, the Vancouver Sun, the Times of London, or the New York Times. With Spotify, you get access to a vast array of artists across many labels—something comparable to what aggregators do, like PressReader for digital print publications.
Chasing a vision built on such an invalid comparison is bound to end in disappointment. And indeed, the online press is hitting that wall—repeatedly, harder and harder each year. The bricks of this wall are the millions of online visitors—over 98%—who will never pay for access, simply because they aren’t offered a more accessible, reasonably priced way to consume the content they desire.
The music industry underwent a radical transformation with the advent of iTunes, which allowed consumers to purchase individual songs instead of entire albums. This shift was significant in an industry where fans follow artists rather than record labels. Just as a viewer might follow a journalist like Christiane Amanpour if she switched networks, music listeners focus on artists, not the labels that produce them. I might respect Deutsche Grammophon, but I wouldn’t buy their Wagner CDs if I’m not a Wagner fan. However, I’d purchase Beethoven or Pink Floyd regardless of the label.
The newspaper industry, however, operates differently. Readers tend to trust certain publications as a whole, and while they might follow specific writers, they are unlikely to switch papers if an author moves. Newspapers deliver a curated package of diverse content, and most readers engage with multiple sections and authors within a single publication.
Spotify works because it offers access to almost every artist across almost every label, striking a balance between cost and value that consumers readily accept. In contrast, a subscription to the Washington Post or the New York Times only provides access to that specific publication. Research shows that readers crave diversity, and democracy thrives on it.
Spotify’s model succeeds because it functions like an aggregator, delivering the diversity that consumers want. For online publications to survive, they need to explore alternative business models that complement subscriptions, because consumers aren’t satisfied with single-source subscriptions. Without adaptation, these publications face an inevitable decline.
We keep chasing the myths…