Why Spotify is not Netflix (But Maybe It Should Be)

If we are to explore the digital marketplace for both streaming and transactional downloads the music business might do well to look at what the film business is actually doing in the same space. We will quickly see that Spotify is not Netflix, but maybe it should be.

Readers will note the film business has not bought into the faulty logic that the only way to combat internet piracy is to make every film ever made, available instantly, on an all you can eat service for $9.99 a month. Some might argue that is what Netflix is, but people making that argument are obviously not current subscribers!

One thing that has struck us in the comparisons between Spotify and Netflix is that Netflix does not have every film, or even every current film, or even a large percentage of popular films. For the vast inventory that Netflix has, you also realize the service has a lot missing. But then again, what do you expect for nine bucks a month?

This is not to say that most in demand films are not available, somewhere (and legally). It’s just not available on Netflix. Other services such as Itunes, Vudu and Cinemanow (to name just a few) offer some films for rental while they are still in the theater, some for streaming rental prior to a home video “dvd” date, and there are constantly new variations and options.

Generally speaking films arrive at Netflix last in the distribution chain, if at all. This is a problem for Netflix in a lot of ways so they have responded to this by 1) offering competitive advances to film producers to get films earlier (generally in the cable window) and 2) they have begun investing in producing original content to differentiate themselves from the competition (this strategy worked particularly well for HBO).

Netflix in responding to their needs in the marketplace is actually investing capital directly into content creation in a meaningful way. Perhaps some artists should charge an advance for high profile new releases that will attract listeners to the service. Likewise, perhaps Spotify should provide funding for the financing and development of new artists.

So here is the question, is the record business really utilizing the new digital platforms correctly to address the current market place? Perhaps by looking at the options available to consumers from movie streaming, rental and download businesses we can find more robust and flexible opportunities for artists.

One thing we’ve noticed absent from the current offerings for example, is say, a $1 a day transactional streaming rental for an album. Why doesn’t this exist?


The movie business releases films in what is known as “windows”. A typical feature length film is generally released in a pattern that looks something like this:

1 Film Released in Theaters
2 Film Released later on Video on Demand (Rental)
3 Film Released later on Cable and/or Broadcast
3 Film Released Later on Home Video (Rental and Purchase)
4 Film Released Later on Netflix (Subscription)

There are variations on the above, but the point being that you can not buy the DVD of a blockbuster film the day it opens in theaters, nor can you view it on TV that night from the usual cable movie channels. Today these windows are being rethought as the film industry explores different release models including how digital platforms are utilized as part of a theatrical release.


We’ve heard people say that the record business historically has not windowed releases. This is only sorta true. It is true that a record is released to all outlets in all configurations more/less simultaneously on a single release date. There may be some exceptions with the availability of say vinyl, but mostly it is true that labels do not withhold music releases from different markets or distribution channels. But maybe that’s not exactly either right if we look at it closer.

Generally speaking, a historical record release “window” looks like this:

1 Radio Airplay prior to a commercial release of the single
2 Commercial Single Release
3 Album Release at Full List Price, but “Discounted” at Retailers

There’s not much more that is done until the album gets to be a catalog title, which the record industry would refer to as a mid-line title. Some records, drop one more step from midline to budget. Records that generally make the last drop may have been albums by artists who had one hit on the album.

Today, these traditional old physical model windows built around pricing incentives don’t really make sense on digital platforms. New Releases on Itunes are not discounted on release date and then return to their suggested list price a week or two later when the discounting ends. So if record release windowing is not based in pricing incentives, perhaps it should be based in accessibility incentives.


What comes next is the starting point for a discussion to break free from much of the current controversy over whether or not Spotify is fair and sustainable. It is an attempt to rethink the digital music distribution landscape in the same way the film business has with varied consumer offerings and options.

We’d love to see some new players in the marketplace for music that function much in the same way that Vudu or Cinemanow do for films. These would be transactional streaming rentals.

1 Single Release Digital Transactional Download 99 cents
2 Single/Song Release Digital Transactional Streaming Rental 10 cents for 24 hours
3 Album Release Digital Transactional Download 9.99
4 Album Release Digital Transactional Streaming Rental $1 for 24 hours
5 Select Songs Released to Subscription Streaming Services, not whole albums.
6 Album Release Subscription Streaming Services

The key to a future where streaming may be the preferred delivery method is dependent upon more variations and flexibility in the the business model than currently offered by Spotify. There are a range of opportunities in exploring business models that allow for streaming rentals, and limited access to different material at different times.

If every decision we make is based upon the extortion of illegally operating and infringing businesses, surely we will pay the price in a race to the bottom where eventually everyone loses except the companies getting our labor for next to nothing.