The Spotify Effect: Digital Distribution and Financial Growth

Abstract

This article analyzes Spotify as a media company that operates at the intersection of advertising, technology, music, and finance. In doing so, this article contributes to media industry studies as a field that investigates the relation between various industrial and economic actors. Given that the media industries, as any other industry, can be defined as a set of markets, one of which is the leading market, and to which other markets are auxiliary, the question asked is what market is leading in the case of Spotify. What the article describes as the “Spotify effect” is the company’s ability to fold markets into each other: to make disappear an aggressive financial growth strategy and business set-up based on ad tech engineering by creating an aura of Nordic cool and public benefit around its use of music. Spotify’s financial strategy has implications for the digital distribution of cultural content more generally.

Rising tides? Data capture, platform accumulation, and new monopolies in the digital music economy

“…Music metadata (data that describe and contextualize music) play a role in the production of ‘musical experiences’, as ‘a digital file rarely exists in solitude and is instead accompanied and linked together with other types of data’ (Eriksson, 2016). Crucially, in addition to existing as a sound recording, ‘music has become data, and data in turn has become contextual material for user targeting at scale’ (Vonderau, 2019). Our focus is on the relationship between user data – a sought-after asset that has been likened to oil (Deutscher, 2013; The Economist , 2017) – and platform capital, whose accumulation strategy hinges on controlling this new music industry currency.…”

Commodification 2.0: How Does Spotify Provide Its Services for Free?

“…; see Zhang et al 2013), and why Spotify should collaborate with large big data companies such as Facebook and Twitter so that it can produce richer playlists and more sophisticated recommendations for its listeners (Germain and Chakareski 2013; Pichl, Zangerle, and Specht 2014). Recently, critics have reported that millions of songs on Spotify catalog have not been played (Palermino 2014) and that the platform fails to comply with the EU data protection laws (Eriksson et al 2019; Marshall 2015; Vonderau 2019). However, little has been published regarding the condition of the producers of digital music.…”

Studying Ad Targeting with Digital Methods: The Case of Spotify

“…Skeggs and Yuill 2016). Preliminary results of the research are published separately (Vonderau 2017). …”