Spotify takes on Apple
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.
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.