How Does Spotify Work?
Techquickie
·Techquickie
·2019-05-06
·
915 words · ~4 min read
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thanks for watching techwiki click the subscribe button then enable
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notifications with the bell icon so you won't miss any future videos remember
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when we were all flinging songs back and forth across on napster and limewire and
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getting cease and desist letters from some suit at a record label or
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alternatively trying to figure out how many 99-cent songs we could fit into our
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monthly budget and our four gig ipod well much of that changed when spotify
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started offering free internet music streaming in 2009 trying to appeal to
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those who wanted a legal way to listen to their favorite artists without
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spending buckets of money on drm protected tracks and appeal they did
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less than 10 years later spotify now has 170 million active users and a library
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of 35 million songs thanks to licensing deals with three of the biggest rights
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holders in the music industry sony warner and universal and also merlin a
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key agency that represents a large number of smaller more independent
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artists i mean to say things have gone well would be an understatement they're
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even listed on the new york freakin stock exchange and that's a
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big deal but how exactly do they survive by taking something that costs money
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music and giving it away for free okay
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yes yes the obvious answer is advertising hence the guy shouting about
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the sales event at the local car lot when you're just trying to chill out to
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something mellow but they've also featured a premium subscription option
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since 2008 that offers offline listening the ability to choose a specific song on
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mobile and an ad-free experience similar to netflix's video streaming service
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which launched the year before but unlike netflix spotify isn't yet
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profitable although it is making enough to stay afloat okay but how does that
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work well spotify brings in significant revenue from both advertising and
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premium subscriptions but they also spend a great deal on licensing songs
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people actually want to hear around 10 billion dollars so far something that's
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actually been a source of some controversy you see even with these huge
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sums of overall royalty fees the amount of money that goes to the record label
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per playback can seem insultingly small with many rights holders only making
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around three quarters of a cent each time someone listens to one of their tracks leaving only some portion of that
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for the actual artist you can't even say they're making pennies per play in 2014
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the situation escalated to the point that taylor swift very publicly removed
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all of her songs from spotify though in fairness to them at t swift's level of
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fame a solidly performing album could net five or even six figures per month
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so we don't blame you for not feeling too bad for her and radiohead i mean
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i'll feel bad for radiohead they're artists of course spotify's popularity
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isn't only due to its vast song catalog it used to rely on its own servers and
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peer-to-peer connections for content delivery but now much of spotify's
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operations are handled through google cloud similar to how netflix uses amazon
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web services instead of its own servers to process user requests and
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recommendations which you can learn more about up here leveraging a large
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redundant cloud service as well as storing its files in ogg vorbis which is
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not a malicious alien race but a compressed format that takes up less
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space than mp3 while maintaining quality has given spotify a reputation for being
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a fast reliable streaming application at least so far
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until they can figure out how to turn a profit their future will always be in
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question but for now investors see enough potential to continue to fund
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them maybe the plan is to pull a page out of netflix's book and launch their
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own record label cutting out the middleman so both spotify and artists
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could make more money hopefully they'll do this by the time techwiggy's debut album bite me drops
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