The Hot Seat: Kate Vale, Spotify

Published in The Music Network


The long wait to play with Spotify is over. The popular streaming music service finally arrived last Tuesday in Australia and New Zealand, the company’s 14th and 15th markets since launching in Sweden back in 2008. The company boasts a licensed catalogue of more than 16.5 million tracks, with some 50,000 songs loaded globally each day. And like elsewhere, the service has three tiers, starting with the ad-funded ‘Free’ offering, rising to the $6.99 monthly ‘Unlimited’ and the $11.99 monthly ‘Premium’ options.

Spotify doesn’t have Australia on a plate. The likes of Rdio, Deezer, Rara and JB Hi-Fi ‘NOW’ are already in the market. TMN caught up with Kate Vale, who oversees Spotify’s Australasian operations and its ten staff Down Under.

My understanding was that Spotify would launch here in March. What took so long?
There were a lot of things to line-up internally to get the launch ready. We wanted to make sure when we launched that we had an amazing product. We made sure we were ingesting all the right content, that our catalogue was as full as it could be. We wanted to also launch with the iPad app, which we’ve managed to do. And also launch with a local app partner, which we’ve done with Triple J [and NZ Top 40 in New Zealand].

So there were no licensing hitches?

No, nothing to talk about. Everything was fine. The labels are very excited to have us here.

Are you concerned you’ve lost ground to Rdio and others?

Absolutely not. If anything it’s great for us. It paves the way. We find in any market we launch we have competitors there before us. It only helps us. The key benefit to us launching in Australia is the fact we have a free tier, so there is no barrier to entry if people are already paying a subscription and they want to come give us a go. Australians are going to change the way they listen to music. It’ll shift towards access to music, rather than owned.

Can you share with TMN how many people signed up for any of the three tiers on launch day?

No, I can’t. But uptake is fantastic.

Do you have a goal for the number of users you plan to graduate-up to Premium?
Internally, yes, we’ve got some numbers we’re throwing around. But nothing we’re prepared to share externally. Every market is different. We haven’t launched in many countries post-Facebook integration. We haven’t launched in any countries outside the US and Europe until now. There are all sorts of things out of our control that are going to dictate how we perform here.

Australians are still hooked on the format of CD albums. What are your thoughts on Australian consumer habits in this access-world?
There’s absolutely still a place for CD sales. It’s up to the individual as to how they’d like to consume their music. In other markets where Spotify exists, we haven’t seen any cannibalisation of physical and the labels have come out and said that. We still see that [CD sales] as a very vital part, and if anything we’re hoping that we’ll be able to grow physical sales. We have seen signs of that in other markets as well. People go on to Spotify and use it for music discovery and then go on to buy CDs.

You’ve also launched in NZ? Is it the same site and how do you view the market?

It’s exactly the same, just the pricing is different. Kiwis are very much into indie music. And they love their homegrown music. Also, I believe piracy is bigger in New Zealand than it is in Australia. Hopefully that is a good opportunity for us to get more money into the music industry.

You’ve a string of launch partners, including Commonwealth Bank. How critical is third-party financial support to your business?

They’re absolutely key for our success in any market. If we didn’t have [them], we wouldn’t be able to offer Spotify users a free service. These advertisers come on board and help support and fund that free tier. We take them on board for three months then open it up to other advertising partners. Seventy percent of our ad revenue and subscription revenue goes back to the labels. It’s feeding the industry.

How often do the ads come in?

Generally after every third song. It’s about one ad every ten minutes. That’s the audio component to the platform, but there’s also a digital component that are only displayed to users when they’re active on the application.

According to a report in The Australian, Spotify is in talks with Virgin Mobile in Australia and Vodafone in New Zealand to bundle the service with mobile plans. Is that true?
It’s absolutely incorrect.

Sean Parker made the big call that Spotify can catch iTunes in two years. Can it?

I’ve absolutely no comment on what Sean Parker says [laughs]. There’s a place for iTunes and Spotify in any market.


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