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Spotify takes on Apple

Rory Cellan-Jones | 08:22 UK time, Wednesday, 4 May 2011

It's a young company, growing rapidly but with an uncertain future and now Spotify is trying to take on the might of Apple. That's not the line its pushing as it revamps the free version of its streaming music service but that's what lies beneath the new strategy - which makes it either brave or foolhardy.

Spotify logo

You may remember that a couple of weeks ago, Spofity announced strict new curbs on the amount of music that users of its free ad-supported service could play, apparently under pressure from music labels unhappy that free music was eroding CD sales.

Now those same users are being offered two things, the ability to manage MP3 players like the iPod through Spotify, and a new download service which offers cheaper deals if you buy lots of tracks at a time. Gustav Soderstrom, the man who has designed the new product, insists it's not just a compensation prize for the curbs imposed on free users. He says this is an idea conceived over a year ago after research into how people use the service and what they want from it.

There's a lot of talk in Spotify's press release about giving users the same experience as premium subscribers by allowing them to take their playlists with them on the move. They can only do that, though, with music they already own, so what is really being pushed here is a revamped download offering.

The Swedish firm freely admits that the existing download service - its third source of revenue alongside advertising and subscriptions - has been a bit of a disaster. Prices for single tracks have been too high to attract much interest and it was never clear to me who would buy when they could get music for free, with adverts.

Now, after more lengthy negotiations with the music labels, it has come up with something it believes will prove irresistible to the kind of people who build huge playlists on Spotfiy and would like to take them with them on an MP3 player. So if you buy 10 tracks at a time, they are priced at 80p each, but if you want 100 you will pay 50p apiece.

Every aspect of this new service is aimed at iTunes, the Apple software which is not universally loved but has a virtual stranglehold on digital music. If Spotify's plan works, its users will soon be syncing all of their music onto their iPods without going near iTunes and they will be able to sync over their home wi-fi, something Apple's software still does not allow. Then when they want new music they will find it cheaper to get it from Spotify's download service rather than the iTunes store.

So should Apple be worried? Well it may be more concerned by the activities of a much bigger business closer to home. Amazon, whose MP3 store has been around for awhile, has just launched a price war in the United States, cutting the prices of top chart tracks to 69 cents - nearly half of what iTunes charges.

When and if Spotify finally hatches the deal with the music majors that allows it to launch in America, then Apple may pay attention to its upstart challenger.

But in the meantime, this new plan for what I described to Spotify executives as their freeloaders - they weren't enthusiastic about that term - really needs to work. While it's real aim is to turn the nine million free users into paying customers as quickly as possible, the music streaming service needs to keep a steady flow of new arrivals coming through the door.

Last month's bad news about limits to the service is bound to put some off trying Spotify, even though the brakes aren't applied to new users for six months. Now the firm has to hope that that a new way of managing their music will keep more customers coming and perhaps persuade a few of them to buy the odd track too.

More than 200 million people use iTunes and hand Apple their credit card details to manage their digital music. If Spotify can persuade even a small share of them that it has a better way of doing things, then it may at last find the path to profitability.

Comments

  • Comment number 1.

    I was one of the early adapters of Spotify, but the lack of a comprehensive music catalog put me off the service. If Spotify can crack the music labels open to distribute this, it'll turn the business in to a behemoth.

    Obvious comment I know, but this frustrates the myself and users I know more than anything else. Being able to stream on your mobile phone (available to BlackBerry yet?) is a welcome, juicy bonus.

  • Comment number 2.

    Queue an ITunes update that causes a loss of functionality to any iPod that syncs with spotify.

  • Comment number 3.

    Goodluck to them in their pursuit. This a free world and they have the right to challenge Apple and others

  • Comment number 4.

    "Queue an ITunes update that causes a loss of functionality to any iPod that syncs with spotify" - agreed

    To be honest stories about Premium users building up playlists on Spotify then finding some of the tracks become unavailable after a period of time ensured that I'd never pay for Spotify. I use the free version of Spotify as a try-before-you buy service but that's all it'll ever be to me

  • Comment number 5.

    What's wrong with the current premium offer? Pay £10 a month for unlimited ad-free streaming, and the ability to put over 3000 tracks on your phone, which you can change as often as you want.

    Way cheaper than downloading and only a few artists missing. Only gripe is that the spotify app eats battery, otherwise it works a treat.

  • Comment number 6.

    I have to say I've been usint the £10 a month premium subscripton for nearly 6 months now and its a bargain.

    Occasionally there is an artist that isn't available (latest one was Fast Car by Tracy Chapman) but I can live with that. Ability to sync to my phone offline playlists, and anything I drop into Spotify localy on my systems will sync too!

    The only thing they need to do is make the player more user friendly for importing lots and lots of music.

  • Comment number 7.

    The proposition is very good but playing local files on spotify is a very poor experience. The player lacks many features which iTunes offers and falls a long way short of the soon to be windows compatible Amarok. Once they sort out playing offline files I think they may be well on the way to a competitive product.

  • Comment number 8.

    I got Spotify when it first came out (it must be a couple of years ago now!) and I've always had the Spotify Free account. With these changes, I am very likely to become a paying customer simply because of how good value the service is. You can get the Unlimited account for only £4.99 a month. Five quid is hardly going to break anybody's bank and for so much music - why should it be free? It's a dream come true - it's like a radio you can control and there are no adverts.

    With the full package (£9.99/month), you could argue that you never need to actually buy music again because you can select a track or playlist and click the 'make available offline' option and listen to music without an internet connection. This is tantamount to having downloaded an mp3. Of course you can't burn the music to CD unless you actually purchase it, but if you can listen to it on your iPod or other portable media device, why would you need to?

    Those who are seething and shouting about how they'll go back to illegal downloading or will delete Spotify and just use iTunes are simply deluded. Most people waste more than the cost of Unlimited account and don't even remember spending the money - why are they so averse to the idea of paying for such a spectacularly good service?

    It's a great challenge for Apple - it's good for smaller companies to take on the big ones like this - it keeps everybody on their toes and leads to improvements which often benefit the user and their experience. So if you love Apple products and you love Spotify, it probably makes sense to support both.

 

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