Spotify, the Swedish-born cult hero of music-streaming services, wants to play you a love song. After years of legal wrangling, the popular European site finally made its U.S. debut on July 14, entering a massive market that is already saturated with music offerings one of the many reasons most newcomers flop. (Anyone remember Lala.com?
But what makes Spotify more appealing than iTunes is that you can listen to its vast song collection for free. And what makes it more appealing than Pandora is that you can easily share playlists with your friends. Basically, Spotify is what would happen if Facebook had a baby with Napster, except that it's completely legal and comes in the form of a desktop application that can follow you anywhere, streaming music even when you're offline. If this all sounds too good to be true free access to a library of 15 million tracks! you guessed correctly that the world's largest music-subscription service comes with a catch.
For now, users can get unlimited streaming at no charge, but Spotify is expected to drive people to paid subscriptions by eventually capping the hours of free listening per month as well as the number of free plays per song. The site made this shift in April in Europe, where a 10th of its 10 million users now have premium accounts, a sign that Spotify could be one of the first online music services to really understand the digital economy.
Premium versions offer users better sound quality on mobile devices as well as unlimited streaming. For $4.99 per month, customers can eliminate aggravating ads. For $9.99 per month, a price comparable to those of similar services like Rhapsody and MOG, the company's top-notch mobile app will stream playlists even when the listener is offline.
Spotify is arriving Stateside armed with deals with each of the four major music labels Universal, Sony, EMI and Warner a critical vote of confidence from an industry that has had a tortured history with online music sites. Spotify is also barreling into the U.S. market just as competition is intensifying between the likes of Pandora, MOG and Rdio (pronounced Ar-dee-o) and new cloud-based services from Amazon, Google and Apple. Meanwhile, AOL recently announced it will relaunch its radio player in partnership with streaming service Slacker, and Myspace is getting a makeover by entertainment utility player Justin Timberlake, who in June bought a stake in the once dominant social-networking site.
But J.T.'s considerable star power may not be enough to outshine Spotify's tie-in deal with Facebook, which is letting its 750 million members see which of their friends are using the music-streaming service. That arrangement plus the hordes of A-listers, including Britney Spears, Ashton Kutcher and Trent Reznor, who have been gushing about Spotify on Twitter might just provide the edge it needs to avoid becoming a one-hit wonder.