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.European music service
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.
"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.