Why Xbox Game Pass rightfully rejects the Spotify model

Xbox Game Pass at Gamescom 2018
Xbox Game Pass at Gamescom 2018 (Image credit: Matt Brown / Windows Central)

Spotify has been in the news lately for political reasons, but even before then, the platform has proven to be controversial. Spotify's rise 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 feature literally every scrap of music ever written, in one vast and gigantic library. Backed early by record labels fearful of music piracy, the effect has certainly had some undesirable consequences, especially for independent musicians and smaller artists. While there are studies that show that piracy has decreased as a result of streaming services like Spotify, the royalty payouts on Spotify are often laughably bad.

You would need to accrue millions upon millions of streams to earn even the most basic living wage on Spotify, and it's made all the more opaque by the fact that Spotify doesn't actually pay a fixed price per stream. You're given a "share" based on the overall streaming throughput on a rolling basis. So, when mega pop stars grab a bigger share due to a viral hit in any particular period, your payout will generally be even lower than usual.

These painful realities in the music business have often been cited in criticism of Xbox Game Pass, where Spotify is used as "doomsday" example scenario to describe where the video game industry could be headed. Xbox Game Pass is different, though, and as long as Microsoft stays the course, the way it has spearheaded what gaming subscription services look like should serve only to benefit devs, rather than hinder them.

The music industry hurt itself in its confusion

Spotify Pixel 4 Hero

Source: Joe Maring / Windows Central (Image credit: Source: Joe Maring / Windows Central)

The Spotify to Xbox Game Pass comparison has always been a clunky one. People consume music differently than how they consume games, and more importantly, Spotify has tens of millions of tracks, making curation incredibly difficult. Spotify really is an "all-you-can-eat" buffet-type deal, where users sit inside Spotify and are barely upsold any other type of purchase. Some artists offer merch and concert tickets through their Spotify pages, but they're buried right at the bottom of the page. By comparison, Xbox Game Pass is designed as an on-ramp to further spending, as a supplementary system, rather than an exclusory one.

In its panic, the music industry didn't fully consider what would happen if it gave Spotify all of the keys. The music industry aggressively hurt itself and its image, as it funded lawsuits against teenagers for pirating music, and lobbied against version shifting and people ripping their own CDs for personal use. For the sake of artists, they could have and should have, explored ways to improve access to music without cratering exclusivity and value. Alas, the damage has been done. Perhaps it was inevitable, but we may never know for sure.

Either way, the perception of value pop music will never return to what it was in the '90s, for a huge range of factors that are too multitudinous to get into here. The point is that Microsoft is purposefully avoiding what Spotify did to music in the way it's building Xbox Game Pass, to protect developers and creators first and foremost.

A highly curated discovery engine with a big upsell

Xbox Game Pass Pc

Source: Windows Central (Image credit: Source: Windows Central)

Internal documents that we've seen in the past indicate that Xbox Game Pass subscribers actually spend more money on games, not less, despite the fact the service has hundreds of games available at any one time. It's an important divergence from Spotify and similar all-you-can-eat services, whose libraries are vast, uncurated, comprised entirely of permanent content. Spotify has trained me not to spend more money on music, because I know it'll always be there. Xbox Game Pass is very different.

Microsoft is building up Xbox Game Pass very intentionally to be a supplementary discovery tool, rather than something it hopes will someday replace retail entirely.

Microsoft has a large section across all of its Xbox Game Pass apps that list games "Leaving soon." Indeed, content on Xbox Game Pass rotates on a monthly basis. Games leave the service, and games enter the service, leaving the volume of games quite tightly curated. Furthermore, Microsoft attempts to on ramp customers towards buying those games outright, enticing them with funded discounts. This is a fundamental distinction from Spotify, which places no expectation on users beyond the simple subscribing and grazing into the service.

It could also be argued that gamers feel that through savings on Xbox Game Pass, they have more money to spend on titles or microtransactions that aren't present in the service. It feels to me that Microsoft is building up Xbox Game Pass very intentionally to be a supplementary discovery tool, rather than something it hopes will someday 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 into the service, which will further increase access to games at retail.

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For the biggest players, Spotify does pay out a flat fee to acquire content. It famously paid Joe Rogan tens of millions for exclusivity on his podcast shows, before royalties. For indie musicians, it's often been the case that they have to pay to get their music onto Spotify in the first place, going through a record label or publisher, who take a cut of your profits for the mere privilege of existing. Microsoft's ID@Xbox 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 every game that hits Xbox Game Pass, as well as engagement bonuses for titles that do remarkably well in the service. Game developers know upfront what they will get for joining Xbox Game Pass, which includes word-of-mouth virality, marketing beats across Microsoft's socials, and news posts across media (like this one, for this month's Xbox Game Pass games).

By keeping Xbox Game Pass' library of content tightly knit, 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 likely never would have previously, had it not been for Xbox Game Pass, and I find myself experimenting in new genres I haven't before. The same is true for Spotify, but unlike Spotify, there's no incentive or even a reminder that CDs and vinyl exist for a lot of the music I'm listening to on the service.

I do own hundreds of CDs and dozens of vinyl records, but of course, Spotify would prefer I didn't buy them at all. And that's because ultimately, it hurts them since it has no retail distribution platform of its own. By contrast, Xbox doesn't want to kill its games retail business, and it seems acutely aware of the damage an oversaturated service can do.

Xbox Game Pass is good

Source: Windows Central (Image credit: Source: Windows Central)

There's no denying that Xbox Game Pass is great value for its subscribers, providing thousands of dollars in potential savings per year, and featuring 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 the way it curates and grows the service. Too much content, and it'll be hard for smaller titles to get noticed, too little content, and people may begin to unsubscribe. It's a tough balancing act, and a difficult task I'm glad doesn't rest on my shoulders. Still, it seems that Microsoft's efforts are paying off.

The music streaming industry is not an example of where Xbox Game Pass is heading. It is in fact 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 some degree of exclusivity and prestige, as opposed to the all-you-can-eat saturation seen in Spotify. Microsoft's first-party permanent exclusives will do the heavy lifting to bring in new users to the service, with smaller titles offered the chance to shine outside of the bigger marketing cycles.

Independent developers are arguably driving the lion's share of innovation in this business, and it's crucial that the big players like Microsoft work hard to nurture that skill and talent regardless of the size of the dev.

Simply put, the music streaming industry is not an example of where Xbox Game Pass is heading. It is in fact an example of what Microsoft is actively fighting to avoid.

Jez Corden
Co-Managing Editor

Jez Corden a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

  • Ah, authoritarianism these days. 95% negative Spotify, 5% Xbox game pass. Even a Joe Rogan sighting. 😏. Windows Central... I'm starting to wonder where the focus lies.
  • lol i barely even mentioned that shit or picked a "side". you got triggered cus you're a sensitive AF political zombie.
  • Good one, Jez, no zombies.
  • Please, stop drinking the Kool aid Jez
  • Agreed Jez, nothing could be construed one way or the other from what you wrote there.
    Only those who are (sub)consciously seeking confirmation bias, could read something into it.
    The points you made were focused on, making the case why it's a very different service.
    And you did that very well, don't let unconstructive/offtopic posts dash your hard work.
  • Streaming services have absolutely reduced piracy though.
    At its peak (depending on who you ask). Bit Torrent was between 35-50% of all Internet traffic. That figure is down into 4% today.
    Today 14% of Internet traffic is Netflix. 12% other HTTP streaming services and 10% YouTube.
    All other traffic types are < 5% each.
  • Once upon a time Dr Who was the most pirated video content. Then the BBC moved to a global day and date release and Who piracy lost its driver. People are willing to pay a reasonable price for easy access to content. The music industry learned it with digital downloads, letting people buy only hit singles instead of forcing them to buy entire CD albums for one song. This was a *return* to the days of vinyl when a 45 single ran $1 and an LP $5-10. It did more to end Napsterization than all the lawsuits combined. Similar examples exist in ebooks. Gamepass offers a similar choice: you can sign up for a smorgasbord of games but if you only want to play one game for months on end buying the game outright is still an option. The consumer chooses what is best for *them*.
  • The first line of your second paragraph his the nail on the head. I'm from Australia, which for a very long time was restricted from a lot of content due to it being locked behind cable TV. You couldn't just pick what channels you wanted you had to purchase packages. So in order to watch, say Game of Thrones, you had to drop 80 bucks a month. So it was easy for people to decide to pirate if they just wanted to watch a couple of potential shows. I think it's also the ability to watch what you want, when you want.
  • Jez, excellent analysis on the differences. I think you explain it perfectly. A bit self-serving due to my own business interests, but I would say that Audible and Amazon's Kindle Unlimited are much more like the Spotify model, and bad for authors, especially self-publishing authors. The most essential defining feature is the mass amount of content. Audible mitigates this in a weird way with the limited number of audiobooks customers are allowed to consume per month, but fundamentally, the economics of these programs are absolutely bad for authors and artists. In stark contrast, for all the reasons you've laid out here, the GamePass model seems like a solid win for everyone. Very impressive, Microsoft.
  • ah that's a good point about audible. are you an author? would love to hear more about how that stuff affects you if you wanna drop me an email: jez @ windows central dotttttt com.
  • eBooks are no better a comparision for Gamepass than Spotify.
    Gaming is a competitive industry--walled garden platforms notwithstanding--whereas ebooks was distorted by the Big Publishing Houses 2011 conspiracy that distorted the market to their own detriment. Distribution is heavily skewed by disinterest of Amazon's "competitors".
    Very complex narrative. If interested I can point you to several sources documenting how, in trying to mute Amazon's first mover advantage, the NYC corporate publishers destroyed tbeir competitors instead. The result of the aborted conspiracy is that Amazon commands over 80% of the total ebook market and their subscription service for Indie publishers , KINDLE UNLIMITED, delivers more income to the authors than all other remaining distribution channels *combined*. Which means that, unless the autbir has a preexisting fanbase from before ebooks, there is no value in "going wide" versus signing exclusivity with Kindle Desktop Publishing. Particularly for newcomer authors. Finally, ebooks and Indies so dominate certain genres (romance, SF, Fantasy) that many traditional publishers have left the genre. Not the proper comparison. Not even close. The mainstream media likes to brand Gamepass as the "netflix of gaming" and there is a fair amount of similarity since both rotate "third party" content in and out and permanently list their "first party" content but again, the differences are more important than the similarities: Netflix, like Amazon's KU, demands exclusivity during the content's run, whereas Gamepass doesn't. And Neflix "first party" exclusives aren't broadly available anywhere else. The closest example to Gamepass is actually HBOMAX, which features some exclusives but also First party movies simultaneously available for sale all over and licensed third party content. Disney+ only features Disney owned content but their Marvel and Star Wars movies are also broadly available for sale. Gamepass is its own, unique thing and looking at other industries isn't going to offer much insight other than the absolutely critical need to maintain a steady stream of new-to-the-service content atop a large permanent catalog of older content, to prevent subscribers from signing on, binging for a month or two, and then quitting. The practice, known as churn, is an existencial threat to content subscription services.
  • You'll find a strong majority of self-publishing authors who would beg to differ re: Kindle and KU.
    Audible is a different story and opinions differ, mostly because of the overly generous return policies and higher distribution fees.
    Neither has anything to teach about Gamepass.
  • Jez, well done in breaking down your argument. I'll be honest. With Game Pass, I've also played (and bought) a ton of indie games, AA, and AAA games at steep discounts that I would never played or even think of purchasing. A great example is Dead Cells. When it came on the service, I had heard a ton of buzz about it through Steam players. Then, I played it, fell in love with it, and purchased the DLC packs. With Game Pass, Microsoft has brought curated content to the forefront. As you discuss, Jez, the company will have to fight to keep indie games relevant and has set a surprisingly high bar for Nintendo and PlayStation to emulate. I'm a multi-platform gamer (Xbox, PS, Nintendo, and Steam/Epic). With Steam and Epic, I have platforms open to purchase discounted games that are solid. With Nintendo and PlayStation, though, I just don't have that. In fact, my PlayStation 4 (which I love) has gathered dust and I haven't found a reason to purchase a PS5 because of Game Pass. I could try new games (including cross-platform ones) on GP which isn't available on a PS5, meaning I have less of a reason to play on or purchase the next-gen PS console. PS4/5 still have a ton of excellent games, but to scratch that gaming itch, I incline to Xbox.
  • Game Pass is a discovery service. If you finish all games before they leave, awesome. Some are even there forever.
    I personally buy games there if I like them.
  • I only came to Playstation because bloodborne. Having all dark souls titles on Xbox, nice, really nice. But needless to say bloodborne was a heavy hand in me crossing over to Sony. I think Xbox is absolutely great. Nothing beats the elite controllers. Game pass is pretty cool, even though I have purchased it I. E. Subscription, I myself really don't play much games outside of Souls, forza from time to time.... However, game pass brought true value for me when I played the outer worlds and effin aye bro... Game pass at that moment proved to be so valuable. I wish Sony had this, unfortunately they didn't. If bloodborne/demon's souls remake was on Xbox I'd quickly snag Xbox Series X. But I truly love my ps5 and just because of this, I'll snag an Xbox series x out here in Egypt if I can definitely find it here. Game pass is truly a true bang for your buck and there's really no denying it. For the casual gamer it's great, however I'm pretty hard core souls guy and Sony takes that trophy for a W for now. I'm curious about Microsoft and its future ip's that will shake the world on its boots. Perhaps elder scrolls 6, star field, maybe some odd small studio will make something that's like arggghghhgg amazing!
  • Catch me and my girlfriend, the woman with 1,000,000 freckles on Xbox Teu starting every Sunday until the world burns from all the exhaust heat the Xbox Series X consoles Microsoft will sell will pump out
    #NoZombiez #runonsentace..runon
  • Independent musicians will eventually leave Spotify for Bandcamp, and the bigger artists will follow because Bandcamp will pay them more/better also. The model that Spotify is built on is a scam, and people and artists are finally starting to realize.
  • I'm pretty sure it's because absolutely no developer in their right mind would choose to put their games on a service where payment is based on "times steamed/downloaded".
  • Disparition of independents studios, trust and Abus de position dominantes for Xgp.
    Discrimination by suscription-paiements with quality sounds, Drm for Spotify.
    Maybe many waits 3 months for music gratis and liberty of musicians.