Leading music streaming services Pandora and Spotify both allow users to create "radio stations" based on genre or specific songs or artists. But only Spotify allows users to search for and listen to any song they like. Both services deliver music via smartphone apps or via their web-based players. Spotify also has an installable program for desktops.
Both services have adopted a freemium business model — the basic version of the service is free and ad-supported; paid subscription allows users to sidestep advertisements and limitations on song play.
Though both offer streaming music, the main difference between Pandora and Spotify is how they deliver that music. Pandora uses an algorithm called the Music Genome Project, which identifies musical characteristics. A Pandora user creates a radio station based on their tastes by entering a band name, song title, or genre. The algorithm evaluates that selection, then chooses similar music to play. Users can customize their radio station by telling Pandora whether it likes or dislikes the music the algorithm selects.
Spotify uses the music stored on each individual user’s computer to create a large database of music. If a user in America has an album by Simon and Garfunkel stored on her computer, then any other Spotify user can access those files. Spotify allows users to build playlists at their whim, as opposed to Pandora which selects music for you.
Spotify’s method is similar to the file-sharing service Napster, but its content is Digital-Rights Management protected, and uses music with permission from large music labels. Spotify users cannot store the music they listen to on their computer – they are in essence borrowing music from other people.
Unlike Spotify, Pandora users cannot select a song to play. Even if a Pandora user uses a song title to create a radio station, Pandora may not immediately play that song.
With Spotify, as long as the song or album you want is part of the shared network, you can listen to that piece of music.
Spotify offers a six-month free, unlimited trial in countries outside of the U.S., and after that limits the amount of music you can listen to to 10 hours per month. In the U.S., Spotify works in conjunction with Facebook to offer unlimited, ad-supported streaming radio. U.S. users can purchase Spotify subscriptions that eliminate advertisements, improve streaming quality, and give access to Spotify's app library, which includes apps like TuneWiki, an extension that transcribes song lyrics in real-time. As of December 2013, Spotify has opened up free access on mobile devices.
In late 2013, Pandora removed the listening limit of 320 hours per month (40/month for mobile listeners) for non-paying subscribers, but these users will still be interrupted by advertisements between songs and have a more restrictive limit on how many songs they can skip. Purchasing a Pandora One subscription for $36 per year removes ads and some limitations. However, in contrast to other music streaming subscription models, a Pandora subscription does not vastly improve audio quality; Pandora subscribers are able to stream at a 192kbps bitrate, a lower quality than what some of its competitors' offer.
Pandora or Spotify? Here's the lowdown, a comprehensive video by TechnoBuffalo:
Pandora subcribers are still limited to 6 skips per hour per station even with a paid subscription. Pandora does not allow rewinding songs, not does it allow making a custom song-list of the users' favorite songs.
edit Paying the Artists
Both services pay artists for use of their music. Pandora pays royalties to artists who get airplay; the company has stated that it spends 4.3 of its revenue on paying royalties.
Spotify has reached agreements with major music publishers to pay artists, but usually does not disclose how much. As of December 2013, Spotify has revealed that it has paid over one billion dollars in royalty.
Pandora has had an ongoing legal battle with ASCAP – the American Society of Composers, Authors and Publishers – over lowering royalty payments to artists.
David Harrell, leader of the band The Layaways, has published how much he receives from Spotify, and estimated that one of his songs would have to play 244 times before he could make just 99 cents (Harrell has pointed out that his band is not on a major label, so payouts for those artists may be different). Radiohead lead singer Thom Yorke has criticized Spotify for being a tool of the larger music industry and bad for “emerging” artists.
edit Social Media Integration
Spotify has invested in expanding its product through social media by collaborating with Facebook. Facebook users can share the songs they play on their timeline, and can listen to music along with their Facebook friends. Users can also download Spotify directly through Facebook.
In January 2014, Spotify also joined forces with Last.fm, a social media website that focuses solely on music.
edit In Recent News
Spotify now has rights to Led Zepplin and opens free mobile access. In other news:
- Pandora and Spotify Rake In the Money and Then Send It Off in Royalties - NY Times
- Spotify - Digital Audio Insider
- Wikipedia: Pandora Radio
- Wikipedia: Spotify
- The Pandora Problem: Royalty, Streamed or Short-Changed - sfcv.org
- Thom Yorke on Spotify - CNBC
- Spotify Drops Free Web Listening Time Limit Everywhere - TechCrunch (Jan 15, 2014)
- What's the Best Music Streaming Service? - Yahoo Tech (Jan 21, 2014)
- Did Someone Say On Demand? - Last.fm Blog (Jan. 29, 2014)