Spotify May Go the "Freemium" Route in the U.S.
European music service Spotify is one of the most highly anticipated applications coming to the U.S. The service, best described as a streaming music version of iTunes, consists of both desktop software as well as complementary mobile applications for Apple's iPhone and the Google Android platform. Already, the service is wildly popular overseas in its current markets which include the United Kingdom, Sweden, France, Spain, Norway and Finland where it has accumulated over 5 million users. There, the company offers two versions of its service - a free application and a premium, ad-free subscription version.
According to recent reports, however, Spotify may do things a little differently when it reaches the States. Says Andres Sehr, Spotify's global community manager, the company is considering going the "freemium" route for the U.S. market.
Why Freemium?
"Freemium" is a word coined to describe a business model where basic services are free while special or advanced features are available for a fee. That's a slightly different spin on the business model Spotify uses today. Currently, Spotify offers its European users a choice between a free, ad-supported application and a paid app which costs around about €10 (around $16.60) a month. With a Spotify "freemium" service, however, there would be just the one application in which users would pay for the extra features they want to use. Details on how exactly this would work and what features would come at additional cost is still unknown. Sehr says it's far too early say at this point. Also unknown is whether this "freemium" model would forgo the monthly subscription fees in favor of the premium upgrades.
Update: as one commenter notes below, Spotify is essentially one app in Europe too. On the company's site, however, it's pitched as available in three different versions - a free app, a day pass, and an ad-free premium version. How exactly the European "freemium" model would differ from the proposed U.S. freemium model is unclear. It may reflect more of a difference in marketing strategy than anything else.
In an interview published today in the Wall Street Journal, Sehr explained why the company is considering making this sort of change. "The U.S. is a completely different market, and the competition landscape's different," he said, adding that "when we launch there, it'll definitely be a challenge for us."
What Sehr is referring to is the particularly crowded market here in the U.S. where services like Imeem, Pandora, Last.fm, and many others are already well-known and popular destinations for streaming music online. In other words, Spotify isn't just rivaling iTunes in the U.S., it's going up against a number of other companies doing nearly the same thing, too.
Spotify on the Mobile
Where Spotify has an edge over its competition is on the mobile front. Although there are plenty of streaming music applications available for both the iPhone and Android platforms, Spotify's app does things a little differently...and considering the glowing reviews, better. Instead of simply providing a streaming radio of sorts based on a user's musical preferences, Spotify's mobile users can actually pick and choose the songs they want to listen to and build a custom playlist. That playlist can also be streamed when the mobile device is offline thanks to Spotify's caching technology.
For this reason, there were originally concerns that Apple would reject the streaming music app because selecting tracks, making playlists, and playing music offline puts it in direct competition with iTunes itself. Those concerns were soon discovered to be unfounded as Apple recently approved the app for distribution via App Store - a decision no doubt influenced at least in part by FCC scrutiny over the company's app approval process and anti-competitive tactics.
While the initial launch of the Spotify mobile iPhone/iPod Touch app is only in the European counties where Spotify is currently licensed, the Apple "seal of approval" means that (in theory), Spotify won't have any trouble making it into the American App Store, too. That is, once they get the American licensing agreements worked out.
Although the company already has European deals with Universal, Sony, Warner, and EMI and it solidified an American licensing agreement with the Independent Online Distribution Alliance (IODA) in July, its the Stateside licensing agreements that are holding up the service's U.S. launch. Still, the company remains optimistic and expects to make its American debut later this year or in early 2010.
ShareRelated Entries
1 TrackBacks
TrackBack URL for this entry: http://www.readwriteweb.com/cgi-bin/mt/mt-tb.cgi/12808
Facebook
Comments
Subscribe to comments for this post OR Subscribe to comments for all ReadWriteWeb posts
Nice one.. It's really good to have options right.
Currently, Spotify offers its European users a choice between a free, ad-supported application and a paid app which costs around about €10 (around $16.60) a month. With a Spotify "freemium" service, however, there would be just the one application in which users would pay for the extra features they want to use.
That's how Spotify already works over here in Europe too. One app, and you just upgrade your account online to get the premium features - mostly higher bitrate and no ads. There aren't two different apps as you suggest here.
Thanks Peter, that's how the WSJ explained it. I'll make a note of it.
As Rhapsody just released their entire library for the iPhone at $15/month one would hope that would be mentioned in your article. Call me crazy. The Rhapsody app works fantastic on my iPhone, allowing playlists to be generated and everything. I've even heard that Rhapsody doesn't block you from multiple log-ins. I've heard great things about Spotify though and think their App Store acceptance a couple weeks back probably smoothed the way for Rhapsody's offering on iTunes. -GBS
I really rate Spotify and as soon as they provide the ability to scrobble to Last.fm through the iPhone app then I will upgrade to a premium subscription!
Having used the Spotify App in the UK for a few days now, I can confirm the general awesomeness of it... I was sceptical at first, I have to admit.
But then signed up for a month just to try... realised you just select the albums & playlists you want, then cache them to your iPhone, and hey presto, every album you want (though not EVERY album is on there, of course).
So far I think it's an amazing service, especially if you're on the move a lot and don't want to rely on streaming.
I've found myself sampling a lot of albums I've never wanted to buy to see what they're like, or sit at a PC and listen to in order to sample.
Downsides with it; firstly, it's an app, so doesn't operate in the background of the iPhone, so you can't multitask. Secondly, it doesn't scrobble to last.fm, which I'd like it to (and given the PC version of Spotify does, I acn't imagine it's that far off).
But I'd encourage anyone to give it a whirl for a month... it's only £9.99, so the risk is equivalent to buying an album that turns out to be pony.
PS I've NO IDEA how the music industry is going to make any money via Spotify, given I'm currently listening to ten albums that I probably won't buy now... but that's a discussion for another day.
freemium has to be one of the stupidest 'coined' words I have ever heard. Come on, is someone that desperate to think they made up a word?
It will be interesting to see how AT&T and other mobile operators deal with the fact that this is a P2P application just like the desktop version of Spotify.
Are there any other iPhone apps that upload significant amounts of data as well as downloading?
I'm currently trying to think where threaded comments fit in the roadmap right now, but it is something that is definitely planned. We're not going to say people *have* to use threaded comments, but the system shouldn't restrict people who want to have that option. Plus for larger conversations I think threaded comments make everything easier to follow.