Summary:

Play.me, a new music service launched by Dada Entertainment, launched this week, offering both free and paid plans to consumers. But as labels’ enthusiasm for free streaming services appears to be on the wane, can Play.me convince users to pay for a premium version?

Play.me, a new service launched by Italian company Dada Entertainment, launched this week, offering both free and paid plans to music consumers in the U.S. and Italy, with more countries on the way. The launch comes as U.S. consumers continue to wait for the arrival of Spotify, which also sports a freemium model. But music labels’ enthusiasm for free streaming services appears to be on the wane, and as such, whether the freemium model will remain intact for the music business remains unclear.

Play.me’s free version doesn’t even have ads yet, although Chairman Massimiliano Pellegrini said it will soon have both audio and visual advertising. He also acknowledged that what it offers for free may change, but for now Play.me provides 10 hours of streaming music each week plus one downloadable MP3. The company has already launched an Android mobile app that features offline caching, with iPhone and BlackBerry apps due “within weeks,” he said.

To be sure, Play.me has the feel of an unfinished service, and Pellegrini readily admits that the company is still experimenting in search of a sustainable model. Only two of the four majors, Sony and EMI, have provided songs to Play.me, which for now severely handicaps its chances of convincing people to pay $9.99 a month for all they can stream (plus five MP3s). In an interview, Pellegrini told me Dada is negotiating with Warner Music Group, and hopes to build on an existing partnership with Universal; independents are represented through deals with key distributors IODA, Beggars Group and the Orchard.

Play.me’s entry further crowds a music subscription market that includes Spotify, incumbents Rhapsody (owned by RealNetworks) and Best Buy-owned Napster, new entrant MOG, and forthcoming Rdio. As I’ve written before, the key differentiators will be cost, library, user interface, free components and mobile app quality; Play.me offers a generous free service, a fairly limited library that doesn’t yet justify its price point, and a user interface with room for improvement. (I haven’t tested the mobile app.) So for now, it’s another place to get free music that will struggle to convert free users to paid customers. Sound familiar?

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