Why Xbox Game Pass rightly rejects the Spotify model
Spotify has been in the news lately for political reasons, but even before that the platform has proven controversial. Spotify’s rise to prominence as the de facto method for music distribution has been a rough ride for both the company and, more importantly, its artists.
By design, Spotify’s goal is to literally present all piece of music never written, in a vast and gigantic library. Supported early on by record companies fearful of music piracy, the effect certainly had undesirable consequences, especially for independent musicians and smaller artists. Although there are studies that show that piracy has decreased following streaming services like Spotify, royalty payments on Spotify are often ridiculously bad.
You’d need to rack up millions and millions of streams to earn even the most basic living wage on Spotify, and that’s all the more opaque since Spotify doesn’t actually pay a set price per stream. You receive a “share” based on overall streaming throughput on an ongoing basis. So when mega pop stars get a bigger share due to viral success in a given period, your payout will usually be even lower than usual.
These painful realities in the music business have often been cited in Xbox Game Pass reviews, where Spotify is used as an example of a “doomsday” scenario to describe the direction the video game industry could take. Xbox Game Pass is different, however, and as long as Microsoft stays the course, the way it’s directed what game subscription services look like should only serve to benefit developers, rather than hinder them.
The music industry hurt itself in its confusion
Comparing Spotify to Xbox Game Pass has always been awkward. People consume music differently than they consume games, and more importantly, Spotify has tens of millions of tracks, which makes curating incredibly difficult. Spotify is really an “all you can eat” buffet type offering, where users sit inside Spotify and are barely resold by any other type of purchase. Some artists offer merchandise and concert tickets through their Spotify pages, but they’re buried at the very bottom of the page. By comparison, Xbox Game Pass is designed as an on-ramp to additional spending, as an add-on system, rather than an exclusive one.
In its panic, the music industry didn’t fully consider what would happen if it gave Spotify all the keys. The music industry has aggressively hurt itself and its image, as it has funded lawsuits against teenagers for music piracy, and lobbied against version switching and people ripping their own CDs for a personal use. In the interests of artists, they could and should have explored ways to improve access to music without sacrificing exclusivity and value. Alas, the damage is done. It may have been inevitable, but we may never know for sure.
Either way, the perception of the value of pop music will never return to what it was in the 90s, for a wide range of factors too numerous to discuss here. The thing is, Microsoft deliberately avoids what Spotify did to music in the way it builds Xbox Game Pass, to protect developers and creators first and foremost.
A highly curated discovery engine with a big upsell
Internal documents we’ve seen in the past indicate that Xbox Game Pass subscribers are actually spending Following money on games, no less, despite the fact that the service offers hundreds of games at any given time. This is a significant departure from Spotify and similar all-you-can-eat services, whose libraries are vast, unorganized, made up entirely of permanent content. Spotify trained me not spend more money on music, because I know it will always be there. Xbox Game Pass is very different.
Microsoft is very intentionally building Xbox Game Pass to be an additional tool for discovery, rather than something it hopes will one day replace retail entirely.
Microsoft has a large section in all of its Xbox Game Pass apps that lists “Leaving Soon” games. This is because Xbox Game Pass content rotates on a monthly basis. Games leave the service and games enter the service, leaving the volume of games quite tightly organized. Additionally, Microsoft is trying to on ramp customers to outright purchase of these games, enticing them with funded discounts. This is a fundamental distinction from Spotify, which places no expectations on users beyond simply subscribing and browsing the service.
It could also be argued that gamers feel that with the savings on Xbox Game Pass, they have more money to spend on titles or microtransactions that aren’t present in the service. I feel like Microsoft is very intentionally building Xbox Game Pass to be an additional tool for discovery, rather than something it hopes will one day replace retail entirely. Indeed, we’ve heard that the next step for Xbox Cloud Gaming is the ability to let you buy games to stream in the service, which will further increase access to retail games.
For larger players, Spotify pays a fixed fee to acquire content. He paid Joe Rogan tens of millions for exclusivity on his podcast shows, before royalties. For independent musicians, this is often the case they or they have to pay to put their music on Spotify in the first place, through a record company or publisher, who takes a cut of your profits for the simple privilege of existing. Microsoft’s [email protected] self-publishing label allows developers who meet certain criteria to submit their games directly to Xbox platforms, and they pay a flat upfront fee for each game that reaches Xbox Game Pass, as well only engagement bonuses for titles that perform remarkably well in the service. Game developers know in advance what they’ll get when they join Xbox Game Pass, which includes word-of-mouth virality, Microsoft’s social media marketing beats, and media news posts ( like this one, for this month’s Xbox Game Pass games).
By keeping Xbox Game Pass’ content library tightly linked, it allows games that otherwise wouldn’t have had much of a marketing presence to shine in a busy crowd. I’ve discovered (and purchased) mountains of indie games that I probably never would have had before, were it not for Xbox Game Pass, and find myself experimenting with new genres that I didn’t have before. The same is true for Spotify, but unlike Spotify there is no incentive or even a reminder that CDs and vinyl exist for much of the music I listen to on the service.
I own hundreds of CDs and dozens of vinyl records, but of course Spotify would rather I not buy them at all. And that’s because ultimately it hurts them since it doesn’t have its own retail distribution platform. Xbox, on the other hand, doesn’t want to kill off its games retail business and seems acutely aware of the damage an oversaturated service can cause.
Xbox Game Pass is good
There’s no denying that Xbox Game Pass is great value for its subscribers, offering thousands of dollars in potential savings a year and offering some of the best games on Xbox. But for the health of the industry, it’s absolutely paramount that Microsoft continues to be careful about how it organizes and grows the service. Too much content, and it will be hard for smaller titles to get noticed, too little content, and people might start unsubscribing. It’s a tough balancing act, and a difficult task that I’m happy about doesn’t rest on my shoulders. Still, it looks like Microsoft’s efforts are paying off.
The music streaming industry is not an example of where Xbox Game Pass is heading. It’s actually an example of what Microsoft is actively fighting to avoid.
With Microsoft aggressively framing the system this way, other companies will have to follow its model. Under Xbox Game Pass, games retain a degree of exclusivity and prestige, as opposed to the all-you-can-drink saturation seen in Spotify. Microsoft’s permanent first-party exclusives will do the heavy lifting of bringing new users to the service, with smaller titles offering the chance to shine outside of larger release cycles.
Independent developers are arguably driving the lion’s share of innovation in this industry, and it’s crucial that big players like Microsoft work hard to develop these skills and talent, regardless of developer size. .
Simply put, the music streaming industry is not an example of where Xbox Game Pass is heading. It’s actually an example of what Microsoft is actively fighting to avoid.