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Summary:

Spotify is slashing the cost of its advert-free music streaming in Europe, in a bid to win more paying customers besides just mobile users.…

Spotify's Daniel Ek And Martin Lorentzon
photo: Spotify

Spotify is slashing the cost of its advert-free music streaming in Europe, in a bid to win more paying customers besides just mobile users. It comes in two new tariffs Spotify’s introducing…

Spotify Unlimited: £4.99pm/ for no-ads music, but no mobile access, no offline or MP3 play and no higher-bitrate quality.

Spotify Open: Free, with ads, no invite required, but no mobile, no offline or MP3 play, no higher-quality and limited to 20 hours a month.

The £9.99 Spotify Premium package remains, giving mobile access and higher-fidelity music, while Spotify Free also remains but still requires an invite (Spotify is still struggling to manage bandwidth if it opens up to everyone entirely).

What does this mean… ?

Last year’s mobile apps, which require the £9.99pm subscription, gave a healthy boost to its subscription base. But it’s now surely acknowledging that this pricepoint is too high for folks at their desktop.

The new £4.99pm price is effectively a price cut for people who are likely the mainstream premium target base, and makes the pay-for offering lots more attractive.

At the last disclosed count, about 320,000 out of over seven million registered users were Spotify Premium customers – that’s about a four percent premium ratio, though the company disputes this.

This is the first time Spotify has introduced a multi-tiered pricing structure, and it will need to be mindful not to confuse potential customers. Its four-strong tier lineup now requires a grid so users can compare features. But, in doing so, Spotify has a more nuanced proposition than just two, blunt, pay-or-don’t-pay offerings, that are likely to appeal to more people.

The £0.99 day pass appears to have been killed off – perhaps there just weren’t enough people powering their parties with ad-free Spotify for a night.

Competition driving down price

Napster recently relaunched as a lower-priced, £5pm streaming service, with five free MP3s each month.

Mog.com launched a pm All Access music streaming service in the U.S. in December and, after raising funds recently, is set to launch in the UK up against Spotify. Speaking about Spotify’s £9.99 pricepoint in January, CEO David Hyman told me: “We

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  1. try

    http://www.youtube.com/mupdemo

    for the future of music…

  2. Both Napster and Sky Songs set the bar for online premium services at £4.99 before We7….. AND both inlcude bundled MP3 downloads at this price (5 for both per monht)…… Is the ‘coolness’ that Spotify traded on in early days wearing off and the labels actually looking for a ROI now?? Are we actually staring to see the REAL monetary value of music emerge online?

  3. Robert Andrews Wednesday, May 19, 2010

    Sky Songs, too – yes, good point.
    DTO using a £5 sweet spot to reclaim the future from the celestial jukebox?

  4. The major labels are getting big pressure from their digital distribution partners (iTunes in particular) to forsake the ad supported model as it is viewed as giving the music away and replacing sales. The company that single handedly changed the music industry business model (to a singles business) and presided over the greatest theft of intellectual property in modern times (the iPod being 90% populated by stolen files) is still dictating to the majors and inhibiting support for new models.

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