Spotify, a new online music streaming service, launched in the U.S. last week and with access to at least 15 million tracks, some U.S. users seem to like it, but no one is ready to ditch iTunes or Rhapsody just yet.
According to the International Business Times, the music site made its debut this month in the United States as well as Finland, France, the Netherlands, Norway, Spain, Sweden, and the United Kingdom. Spotify, now headquartered in London, has teamed up with social media measurement site Klout to offer North American users free access to the music streaming and Klout's program. So far, a handful of twitter members have said they like the site, but many are just re-tweeting the offer of a free invite via Klout and other promotions.
Founded by Daniel Ek, and Martin Lorentzon and developed in 2006 in Stockholm, Sweden, the music streaming service offers a variety of music from major and independent record labels, including Sony, EMI, Warner Music Group, and Universal. Spotify was launched for public access and announced licensing deals with the major labels in October 2008 but free accounts were available by invitation only in an attempt to manage its growing demand.
Users have the option of a free account supported by visual and radio-style advertising or for paid subscriptions without ads and with a range of extra features such as higher bitrate streams and offline access to music. Subscriptions are restricted to people with credit/debit cards or PayPal accounts registered in certain countries. An Esquire.com take on the new music site said Spotify empowers its users with lots of options like importing songs you already own and sharing playlists. And unlike Rhapsody, it's “totally free.”
The site also offers desktop applications available for Linux, Microsoft Windows and Mac OS X, so music lovers can stream their favorite tunes straight to their computers. If you have no wireless connection, don’t worry, they’ve figured that one out too. In May 2010, Ek, former CTO of Stardoll, and Lorentzon, co-founder of TradeDoubler, decided to try offering premium users the ability to wirelessly synchronize their playlists for offline use. American music lovers, huge on mobile applications they can use from their phones will enjoy Spotify’s mobile streaming of play lists for Palm, iPhone, or Android phones, but only if they pay for a premium subscription for mobile devices.
Experts are looking for glaring differences between Spotify and other music streaming sites already in place in the North American market, but so far, none has been reported. Leaked marketing projections for the new site showed Spotify officials predicted they would have 50 million users within its first year in the U.S. Matt Rosoff, of Business Insider said that is not optimism, it’s simply crazy for many reasons.
For one, there are several sites just like Spotify already in the U.S. like Pandora, iTunes and Rhapsody which have been around much longer and not even they have as many users as Spotify predicts it will amass. Rhapsody, which has offered its mobile application for two years, has been in business for nearly 10 years, and their numbers just recently reached 750,000 subscribers, said Rosoff. After reporting a $4.4 million loss during its first year of operation, a huge rebound brought their subscription numbers to 10 million users in September 2010 with about 1,000,000 being paying members.
Spotify’s earlier licensing deals with the major labels are generous but may not fare as well in the U.S. where labels have treated the North American market quite differently. Spotify says users will have 10 hours of free on-demand music streaming per month before they must subscribe. Major companies such as Microsoft, Google and major label, Sony were not successful at convincing the music industry to allow that much access to free music without sanctions. It's hard to imagine Spotify will surpass that hurdle.
Add to that the fact that Americans have been spending less money on music, opting to pirate music from site such as Napster, Limewire, Bearshare and Kazaa, by passing subscriptions, and the odds increase. With record labels stalling on the digital music era, users seemed to lose interest and focused on other entertainment options such as video games. According to the Entertainment Software Association (ESA), which acts as the governing body for the interactive entertainment (video game) industry, the computer and video game software industry in the United States alone saw sales rise to $11.7 billion in 2008.
Spotify’s Facebook deal will also face a lot of competition since other music sites have also launched similar programs such as iLike. The site allowed listeners music playback within their Facebook pages. Users weren’t impressed after learning that they only got 25 free plays per month. The program merged with MySpace hoping to see a change in numbers, but that never happened.
The bottom line, Spotify’s numbers reflect a great deal of optimism, but in reality, expecting millions of consumers to start paying for music again when they have other options and just aren’t interested, is just unrealistic. Only time will tell how well the site does in the U.S., but users say if they fail to set themselves apart from current music sites, they will meet a fast demise.
While Spotify claims to be the second largest source of digital music revenue for Europe's record labels, Americans may get bored with it fast, but don’t rule out success, said Esquire.com. Turntable.fm went from a virtual non-factor to “supposedly game-changing.” Again, anything is possible.