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Spotify tethers future to Facebook

Social network membership mandatory for subscribers

This is a story with huge implications for the future of the web. Even if you don't use Facebook or Spotify - I don't - and couldn't care less, you can nevertheless start to see how business relationships will develop.

Last week's alliance between Facebook and Spotify turns out to be a much better deal for Facebook than Spotify. While Facebook declined to anoint any one music company as its exclusive provider, and a dozen are signed up, it has extracted exclusivity from the music companies. Or at least one of them. New sign-ups to Spotify must be Facebook members - the non-Facebook world will have to go somewhere else.

Such is the power of distribution platforms. Facebook has got one, and if you want to be on it, you play by Zuckerberg's rules. It has always been thus. There isn't an industry in the world where this ancient rule doesn't apply. And while people may get misty-eyed about the "open web", or the "neutral net", this kind of utopianism was always naive in the extreme.

Deals are made. It's business, folks.

The Facebook music deal also opens all of your Spotify listening to Facebook users - your listening habits, playlists and history are all shared with a billion others, and you must turn this off manually to regain your privacy.

Spotify users are upset about this, and upset about being herded onto the Zuckerberg Reservation.

Spotify has put out an official explanation using recycled tweets from co-founder Daniel Ek yesterday. And from these, Ek seems serenely oblivious to the implications.

"There's been a big barrier to sign-up, we wanted to remove that and make it a seamless experience," he said in one tweet, apparently indifferent to the criticism that Spotify had just erected a barrier where there wasn't one before.

"We want to remove barrier to sign-up and create a more seamless experience..." he confirmed in a follow-up.

And Spotify collated these into a formal statement, adding this:

Think of it as like a virtual ‘passport’, designed to make the experience smoother and easier, with one less username and password to remember. You don’t need to connect to Facebook and if you do decide to, you can always control what you share and don’t share by changing your Spotify settings at any time.

So what's in it for Spotify?

Well, Spotify obviously needs the attention that Facebook's distribution channel can bring. Spotify's business is selling subscriptions, and to get people into the paying habit, it needs them to try the service first. And Spotify's new users, who wander in from Facebook, will get six months of free streaming. Universal Music's digital boss Rob Wells reckons it takes six months of free before users see the value of paying - after which they don't get bombarded by adverts and enjoy higher bit-rates and mobile access.

(Although in my case, the opposite was the case: after six months of paying, I gained a Zen-like awareness that I could save a tenner a month by cancelling a service I didn't really use. You can hear almost anything for free anyway, and then decide to buy it or not.)

While Spotify has paid a price for its prominence, it may argue (once it gets its shambolic corporate communications into gear) that, in the long-term, excluding competitors is more than worth it. Those rival music companies will have to work much harder, spending far more on marketing, to match Spotify's profile.

Already, Spotify claims 1m new users from the deal in just a few days. The gains for the other services are much more modest: just a few thousand a piece, according to reports. So the dominant position is becoming entrenched. So far, so good.

But in the short to medium-term, this is an expensive gamble. Remember the most important aspect to the deal I highlighted last week: there's no new money coming into the system. The pot does not become larger.

And there are other problems ahead.

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