Spotify made waves last week when it announced additional features for its free music streaming service for iOS and Android devices, Mashable reported. This news was embraced as a huge development, as the popular service was previously only available on desktop and laptop computers, unless the user purchased a premium subscription.
Fighting for a Competitive Edge
Spotify’s latest update positions the service to better compete with rivals such as iTunes Radio, which it stacks up with rather nicely, according to early feedback. Richard Devine, iMore senior editor, recently wrote up a comprehensive comparison of the two services, and crowned Spotify as the king of the moment.
Like many users, Devine found the default shuffling feature to be one of the stronger aspects of the free mobile service. With Spotify’s shuffle setting, the user can select an artist and hear a playlist of their tracks. This is unlike iTunes Radio, which merely serves up random songs from random artists in similar genres. The iMore post also gives Spotify’s free service high marks in global availability, search results, and catalog depth, which was recently boosted by the addition of the historic Led Zeppelin library, acquired in a streaming licensing deal.
When any service is offered for free, be it an email marketing solution or a web hosting plan, the service provider is usually expecting to convert those users into paying customers. Spotify appears to be banking on this very strategy. “The more music you play, the more likely you’ll pay,” Daniel Ek, Spotify CEO and founder was quoted as saying in a CNET article. Spotify is offering its free service in an ad-supported package similar to rival Pandora’s format. According to Spotify, roughly 6 million of its 24 million active users pay for an ad-free music experience.
The push to a free offering raises serious questions about the viability of the company’s business model. Spotify has been operating since 2006, yet has failed to make a profit. The New York Times reported that the Stockholm-based firm lost $78 million in 2012, despite doubling its growth after a major expansion. With revenue woes to account for and rivals that include the profitable iTunes Radio, Pandora, and Sirius XM, it would appear that Spotify has its hands full in the highly competitive music-streaming market.
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