MarketLine Blog

Spotify turning users from Premium to Uber

Music streaming subscription service, Spotify, has teamed up with the somewhat controversial mobile taxi app service, Uber. The partnership will get underway from November 21 when the joint service will be launched in 10 cities around the world, including London, Los Angeles, New York, Sydney, and Toronto. Both companies hope the service will be launched globally weeks after the initial launch.

Providing Uber users subscribe to the Spotify Premium service, they will be able to choose what music they wish to listen to during their journey. Users will be able to upload their own playlists, choose from ready-made playlists or search for tracks as normal, wirelessly through their own device. Drivers will, however, be able to retain control of the volume themselves, and will be able to opt out of the service should they wish to do so.

On launch day, Spotify and Uber have also teamed up with music artists across five of the 10 cities the service will immediately be launched in. Recording artists, including Professor Green and Diplo, will be performing live sessions and will even be surprising customers in ride-alongs throughout the day, according to Spotify.

Spotify have claimed the collaboration will make taxi journeys a more personable experience, although the deal – whilst its financial information has not been disclosed (and need not be, given that both are private companies) – has been heavily criticized. Some critics believe Spotify and Uber undercut the traditional methods of purchasing music and using taxi services, respectively.

Spotify has recently received a lot of flak from recording artist Taylor Swift, who has pulled her albums from their catalogue, claiming artists are not receiving enough revenue from songs and albums streamed through the service. Other major musicians such as Coldplay have delayed the launch of their latest album on Spotify by four months in a bid to maximize revenue from actual downloads and purchases of hard copies of their album. Spotify has, however, hit back at their critics and claimed that they have paid back 2 billion USD in revenue to the music industry to date, with 12.5 million of its 50 million users being paid subscribers.

Controversy has also surrounded Uber since its inception in 2009. Traditionally, taxi drivers share a sizeable percentage of the money they earn from their fares with their employer, typically about 33%, according to Forbes. Uber CEO, Travis Kalanick, has claimed that Uber’s typical earnings from drivers come out at approximately 20%, vastly undercutting that of the other companies. Lack of regulation along with aggressively competitive prices and practices with its use of GPS has had other taxi companies protesting against the company, as it clearly favours the consumer and will no doubt damage other firms with far higher overheads making it difficult to compete with Uber.

There are potential downsides to the deal, from the perspective of the Uber drivers complaining it has the potential to make their journeys more distracting, and from artists like Taylor Swift who claim they are not compensated enough for their music due to consumers using the free Spotify platform to listen to their tracks. The deal could prospectively draw more people towards paying for Spotify’s Premium service and ultimately entice more people to use Uber. This could be a master stroke for both companies, diverting attention from the Taylor Swift debacle for Spotify and strengthening Uber’s position in the market, though its effect on the rest of the taxi and private hire market could be particularly damaging.

For further reading check out our The music industry: The rise of digital musicBeat by Dre: What does Apple stand to gain? and Uber Technologies.: Calling a cab for the Taxi Industry? case studies.

Posted in Media, Transport.

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