Spotify breaks out to an MTV beat

"Nobody falls in love with a jukebox, you have to bond with a human being.”

So said MTV founder Bob Pittman in the book ‘I Want My MTV'. Pittman made the quote around MTV needing a mix of on-air personalities to help define the character and make-up of the brand. The solution for Pittman, according to ex MTV exec John Lack, was to find "a black person ... a girl next door … a little sexy siren … a boy next door … and some hunky Italian looking guy with curly hair.”

These quotes were made just prior to when MTV launched. That was in 1981. It's now 2012, and one could argue that Pittman's vision still defines the network, even if they don't play much music anymore. However when it launched (and did play music), MTV quickly emerged as a legitimate challenger to US radio and served to diversify the music acts broadcast to America's youth who were being fed old album oriented rock through most radio stations. MTV opened up the US to a huge plethora of new acts, from Prince to Duran Duran to Motley Crue and even Michael Jackson.

The situation was relatively straightforward. There was a lot of music available – a stack of bands from North America and the rest of the world – and accessing their music was difficult. Radio playlists were conservative and generalist and of little relevance to anyone under 24.

You could argue right now we're in a similar situation. And like in 1981, a new challenger is emerging. Well, challengers.

After having no real legal 'on-demand' music service of quality for years, early 2012 saw a plethora of the services launch. Most of them work in a similar fashion. Pay a monthly fee (say $8, $12, $20) and you get access to unlimited music on your PC and mobile. Some allow free use of the PC version, but with ads spliced within the music and limited functionality. Most allow some element of social plug-in, play listing, search function, recommendations and most can connect with other music services to enhance the experience.

From an onlooker's perspective, what I see are a heap of similar products. They are good products, they function well and technologically are impressive. But they are all very much alike and that can pose an issue in the fight for the consumers' love. They are not entirely dissimilar to ISPs – functional, high tech, but effectively a commodity. However unlike ISPs, there is not room for six or more on-demand music services in a territory like Australia. Well, not if they all want to run at a profit.

The market leader right now is Spotify. It is well funded, backed by some heavy hitters and is expanding rapidly. In Australia it has over 450,000 people using the service via a web browser, more if you count mobile and tablet. And last week, at a media session in the US, Spotify emphasised the importance of curation in the product moving forward.

Founder Daniel Ek summed up the current issue in a nutshell: "Spotify is great when you know what you know what you want to listen to, but not so great when you don't.” What Spotify is trying to do is differentiate itself by attempting to be the best at helping users find music they will love. Music that will inspire them. Rather than being a huge database of music, it has realised it has to connect the user and the content to truly demonstrate value to both sides. After all, that is what both are looking for. The user wants great entertainment, the talent want to increase their fan footprint and create fanbases they can monetise via more lucrative live music, recorded music and merchandise sales.

When MTV's Bob Pittman made the quote at the beginning of this piece, he knew that – like Spotify's strategy now – what MTV did was easily replicated. It played music videos made by someone else, paid for by someone else, on TV. But he knew that personalities – exclusive on air talent – could give the channel a real point of difference and offer consumers something of value. It's the same reason MTV got into creating its own programming.

Music services are not in an entirely different business. Their content is created by someone else, owned by someone else, transmitted on cables and connections owned by someone else. So if there are six or more services with more or less the same core functional suite, using the same distribution channels owned by ISPs and mobile carriers, who wins the battle for the consumers' love? And don't underestimate the need for love here – these generally are not free services. Most require an investment of time, and more importantly money.

One could argue that Spotify and Ek have cottoned onto the same realisation Bob Pittman had, albeit 31 years later. Back then nobody did fall in love with a jukebox, but they did bond with the human element of MTV. This observation made MTV the first profitable cable network in the US and was the springboard to great wealth and an esteemed career. Will we say the same thing about Spotify in three decades' time?

Ben Shepherd is group commercial director at Dainty Consolidated Entertainment and blogs at Talking Digital.