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Summary:

Hot music startup Spotify may have won over millions of users in Europe, but it still hasn’t launched in America. That hasn’t stopped it trying to take on Apple, however, by making a surprise move to try and replace the increasingly-bloated iTunes.

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SpotifyA couple of weeks ago Spotify, the European music streaming startup, came in for sharp criticism when it made the decision to place tight limits on the music you could listen to for free. It made financial sense, but left us wondering where its strategy was going.

Today it’s revealed the next piece in the puzzle, and it’s a bold move: a new version that makes it — for music, at least — a direct competitor to Apple’s iTunes

What do you get from the new, improved app?

  • Management and synchronization: Until now, Spotify users (like me) conducted their desktop listening through the app, but still had to juggle the music on their iPods through iTunes. No more. The new client allows you to manage music on an iPod. The system also works for Android.
  • Download service: Spotify has offered you the chance to purchase tracks for quite a while, but it was a piecemeal, white label service where users could only buy a single track at a time. Now, there’s a more straightforward shopping system, which allows people to purchase entire playlists of MP3s with a single click — and sync them directly to their music player. The basic prices seem to be a little higher than in iTunes, but the more tracks you buy the cheaper it gets: in the UK, for example, a bundle of 10 tracks will cost £7.99 ($13.16) but 100 tracks will cost £50 ($82.38).
  • Mobile apps for all: Spotify Mobile is one feature that only premium subscribers have had access to in the past — their monthly fee lets them stream music to their handset, not just their computer. Now, with the enhanced purchasing options, all users (even those who don’t pay to subscribe to Spotify’s extra services) will be able to download the mobile app and use it to listen to tracks they’ve bought. Non-paying users still don’t get music streaming on their phones, however.
  • It’s a strong line of attack from the Swedish startup, and not entirely expected: most reporting has focused on the way it has been angling to move into the U.S. market, particularly since it has a substantial war chest after raising $100 million.

    But let’s not pretend that in doing this, Spotify is breaking completely new ground: it is most definitely not the first company to try to provide an alternative to iTunes. Among the others attempting to compete directly with iTunes is DoubleTwist, a San Francisco startup that has been going great guns.

    However, it is one of the most direct plays against Apple that we’ve seen. Spotify comes from a different direction to most of the competing sync platforms, because it’s starting out with a strong base in music and a million subscribers.

    There are still plenty of weaknesses: it doesn’t have an American service (some have suggested that Apple is exerting influence over record labels to stymie Spotify’s move into America). It’s still pretty poor at the process of music discovery — the service is great if you know what you want to listen to, but if you’re looking for a radio-type service, then it’s got a long way to go. And, if we’re comparing it to iTunes, it still only does music (co-founder Daniel Ek recently denied reports that it planned to launch a movie streaming service)

    But it will certainly be interesting to see what Apple does in response. While Spotify is no Amazon, it poses a bigger threat to Cupertino than most of the other players out there. Apple has a track record of changing its software regularly to try to prevent third-party iPod syncing, so it will probably keep the Swedish business on its toes.

    And I suspect it may also prompt Steve Jobs to demand that his engineers rebuild iTunes and turn it into something better — it is, after all, a bloated and increasingly confusing piece of software that’s essentially just a hodge podge of different products slammed together in one. In terms of ease-of-use, iTunes is just about the least Apple-like piece of software it produces.

    1. Besides pushing more users into becoming paying subscribers, the new rules and these new features will also enable Spotify to better monetize on their free users: It’s hard to find a better sales lead for a song than someone who’s just listened to it for five times in a month. http://goo.gl/yRBU6

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      1. Bobbie Johnson Wednesday, May 4, 2011

        Good point!

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    2. It’s obvious that Apple will block iPod synchronization with Spotify : http://www.beansight.com/prediction/apple-will-block-ipod-synchronization-with-spotify

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      1. Bobbie Johnson Wednesday, May 4, 2011

        It’s a game of cat and mouse here, but it depends on how quickly you can respond to Apple’s changes. DoubleTwist has been running up against this problem for a long time, with hardly any significant trouble.

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      2. Apple blocks those who use Apple’s iTunes software to sync with their devices, such as Palm did with its Pre. Apple has done nothing to those (like DoubleTwist) who use Apple’s iTunes Music Library.xml file to perform a sync. So not only is it far from obvious, both you and Mr. Johnson are probably just plain wrong about what Apple will do.

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    3. Respectfully disagree. Competing directly with iTunes is a recipe for disaster. Spotify would strategically be planning for a scenario where it can co-exist with iTunes. Remember audify?

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    4. rick gregory Wednesday, May 4, 2011

      In the meantime, US readers still can’t use it. I do NOT get the fascination with Spotify in the US. It’s not available. It doesn’t matter if they ship dancing boys or girls (your choice!) to your door every month. Now, I get that non-US people read this – I’m not at all asking GigaOM to ignore things not available here. But I guess I am asking you to not fetishize Spotify when there are two similar services that are available in the US, Rdio and MOG.

      I’ve not used Rdio, but do use MOG and it’s pretty nice. Both are certainly worthy competitors to Spotify and, at least for those of us in the US, actually available here. However, a quick Google search of GigaOM shows 105 results for MOG, 110 for Rdio… and 1200 for Spotify. Anything seem odd about that to you?

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      1. Bobbie Johnson Wednesday, May 4, 2011

        Hey Rick, thanks for the comment. It’s a fair point — Spotify gets a lot of coverage, perhaps more than other similar startups. These things tend to go in cycles, and we all wish we had more time and attention to devote to worthwhile stories.

        For my part, though, I’ve written about MOG, Rdio, Pandora, Last.fm plenty — but I’m writing from the UK and trying to bring more European stories to the table, so what Spotify does falls squarely in my camp. As you point out, not everyone lives in the United States!

        (Also, I think the disparity in coverage isn’t as great as those Google numbers suggests, since I think most of those 1200 results you point to are links inside other posts, rather than posts themselves).

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      2. There are many more streaming services, including Rhapsody (which was around before Spotify, I think), Napster, Rdio, MOG, and maybe other smaller ones. The big difference between all of those and Spotify is that Spotify offers free listening (with limits), whereas those other services are paid subscription only. Free music always gets a lot of attention :)

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    5. Give me spotify on apps and across all my phones and devices and I’ll never buy another track. This has to be the future of music. What else could you possibly need?

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