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Spotify Australia: our major competitor is piracy

Spotify Australia and New Zealand MD Kate Vale explains how the streaming service is trying to lure pirates onto the platform, and reveals hopes of striking a telco deal in Australia.

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Spotify Australia and New Zealand MD Kate Vale. Spotify

Spotify has claimed the crown of being Australia's most popular music-streaming service. According to Nielsen data, which measures similar services such as Rdio, Pandora and Songl, Spotify has captured 70 percent of the local market.

Australians are spoiled for choice when it comes to choosing a streaming provider. However, with over 15 services available locally, the market is definitely crowded. Spotify Australia and New Zealand managing director Kate Vale thinks that a few years down the track we will see the number of offerings shrink dramatically.

"We see that when services launch in any market around the world, and Australia was a couple of years later than a lot of other major markets around the world, that there tends to be quite a few players and the industry generally is quite saturated," she said. "Generally what happens is about two, three or four players survive, and we definitely think that will happen in Australia."

The streaming service recently celebrated its second year in the local market, revealing statistics and usage patterns of Aussie listeners.

"Australians spend on average 109 minutes a day on Spotify which is huge, and there's not many forms of media that can beat that in Australia -- in fact I think TV is the only one that can. That's 8 times what the average person spends on YouTube a day, and they're watching video."

Vale says that Australians are "very lean-forward" consumers on the platform, curating playlists and sharing music socially. Aussie users have created over 27 million playlists, while over 8,200 years of music has been streamed in the two years since launch.

With the piracy debate in Australia more heated than ever, content providers are looking at ways of making their platforms more appealing. Rather than other music-streaming services, Vale said Spotify's major competitor on a global level is piracy.

"People that are pirating music and not paying for it, they are the ones we want on our platform," she said. "It's important for us to be reaching these individuals that have never paid for music before in their life, and get them onto a service that's legal and gives money back to the rights holders."

"Until there's free, legal and timely ways for people to download content, then they're going to turn to illegal ways of doing it. At the moment in Australia we believe there are 2.8 million people that are illegally downloading music every single month. We believe that's about 30 songs a month, a staggering 1 billion songs a year. If we can get even half of these people onto Spotify or legal services, it means there's going to be money back in the industry which is good for artists, streaming services like ourselves."

Vale revealed that Spotify is working on some local market research data on piracy and plans to release the findings later this year.

As for overseas markets, Vale used Spotify's home country of Sweden as the example to show how the streaming service is altering piracy habits. "Since our inception, piracy has been reduced by about 30 percent, which is huge, and we'd like to think that [when the Australian market becomes mature] we would absolutely have a similar sort of impact."

Mobile music

In New Zealand, Spotify recently signed a deal with Telecom to offer free Spotify subscriptions with selected monthly access plans. Starting at NZ$29 per month on a prepaid option, users get access to Spotify Premium which offers ad-free listening across devices as well as offline caching.

"Telecom needed to appeal to a younger audience and we obviously needed to extend our reach in NZ so if we can replicate something like that in Australia we'd be very happy."

Unlike the other Australian music-streaming and telco deal between MOG and Telstra, the Telecom and Spotify partnership in New Zealand does not include unmetered listening on a data connection.

"We haven't really had much feedback in the market about Spotify costing a lot of money for people to listen to in terms of data usage," Vale said. "I think that's because people switch their playlists into offline mode so they're not eating into their data."

As for a similar deal being struck in Australia, Vale is hopeful but won't be drawn on any specifics just yet.

"Obviously it's a deal we'd love to replicate locally."