Summary:

Apple (NSDQ: AAPL) says it has approved an iPhone app from Spotify, a music service that some people believe represents a growing threat to…

Daniel Ek, CEO, Spotify
photo: Spotify

Apple (NSDQ: AAPL) says it has approved an iPhone app from Spotify, a music service that some people believe represents a growing threat to iTunes.

The decision has been closely watched in part because Apple has previously disallowed apps it deems to duplicate core functions of its handset. Speculation had centered on whether Apple would regard an unlimited-music app as potentially cannibalizing its own iTunes Store’s a la carte downloads, although there’s no proof that this is how it feels.

The FCC is currently looking into Apple’s failure to approve the Google’s Voice app, which has sparked some criticism in tech and media circles, with some alleging that Apple’s is influenced by its desire to protect its network partners’ voice call revenue, rather than have it be undercut by Google (NSDQ: GOOG) voice data traffic. Apple says it still has not made a decision whether to accept or reject the app; it also say that it is acting alone in the decision and that its exclusive partner on the iPhone, AT&T (NYSE: T), is not involved.

The iPhone app, which Spotify submitted to Apple a month ago, is by no means Spotify’s only planned business model, but it is one of the first big proposed drivers of premium subscriptions for the unlimited music service. Spotify is winning rave reviews, but a question mark hangs over its chances of financial success. The app would be free to download but requires a £9.99-a-month subscription, which also removes ads. Spotify says there will also be an annual-subscription option.

Universal Music in Sweden is reported as saying that it’s is now earning more now from Spotify than from iTunes. Some cynics had even wondered whether Apple was delaying Spotify approval to unveil its an unlimited music service of its own in its upcoming Sept. 9 event.

An Apple spokesperson referred us to Apple’s recent FCC letter, in which it says 95 percent of applications are approved within 14 days of being submitted,” with each app reviewed by at least two reviewers in a team of over 40, though about 20 percent of new apps are “not approved as originally submitted.”

Meanwhile, another music service, RealNetworks, has also submitted an application for its Rhapsody app, which also requires a premium subscription, this week. Spotify hopes to launch in the U.S. in Q3 or Q4.

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