Blog Post

Spotify’s Premium Tilt Now Includes ‘CD Quality’, But Is It Enough?

To most users, the audio quality is probably perfectly serviceable, but the streaming music app du jour now says it’s doubling its 160Kbps stream to a 320Kbps, “CD-quality” version in a higher-quality Ogg Vorbis codec – only for premium, paying users.

Spotify has wowed users in western and northern Europe since launching late last year, but questions remain over the extent of royalty outgoings and whether it can build a premium income stream big enough to offset those costs.

The startup, still young, remains modest about the avenues it’s exploring but, from recent statements (some given to paidContent:UK directly by the CEO and UK MD), we know some ways it hopes to leverage paying customers are the following

Mobile apps: iPhone and Android are under development, S60 is likely.
Other platforms The API could mean a Last.fm-style grab toward other home entertainment devices. Will people pay to liberate their Spotify from the desktop?
Exclusive pre-releases: But is a seven-day advance on general release enough?
Interviews and features: To augment the tunes – but Spotify will need a content partner.
Gig ticket giveaways: Music services always get free comps – but the regular giveaways (like this for Spinal Tap) are little more than radio stations give away for free in on-air contests.
Live session archive: UK MD Paul Brown wondered aloud in April but would require working with labels to unlock catalogue.

It’s true that most users may never pay for any of these features. But Spotify’s developing revenue model appears not to be one-size-fits all. Instead, in the best tradition of web services, it is letting the core product go free while targeting the small slither of other users passionate enough to pay for extras with a range of options.