Spotify squares up to iTunes

The music streaming service has revamped its download offering. Can it steal Apple's throne?

by Emma Haslett
Last Updated: 16 May 2011
Apple has warded off many pretenders to its various thrones over the past few years, but now Spotify, a service allowing users to listen music without having to download it to their computer, is after one of the most profitable jewels in its crown: iTunes. The young upstart says it’s come up with software which will mean iPods and iPhones can automatically synchronise to users’ computers, without them even having to plug the device into the computer, thus preventing users from even needing to open the widely unloved iTunes (and by association, the iTunes store). What’s more, Spotify has launched a revamped download service, which puts it directly at odds with iTunes. It’s bold stuff. Should Apple be worried?

As of a couple of weeks ago, the 9m Spotify users who didn’t pay for a subscription were limited to the number of hours of music they could listen to each month. They were also unable to use the service’s iPhone app (unlike their fee-paying counterparts). Similarly, the company’s attempt to take the download market by storm had fallen rather flat, mainly because the prices Spotify charged couldn’t compete with Apple.

But its new plans mean that the 90% of users who don’t pay for subscriptions will be able to take their music with them (although they’ll still be subject to a cap on the amount they can listen to, and they’ll have to listen to ads). Presumably, that’s because Spotify hopes it’s found a new way of squeezing money out of them: it’s going to allow users to download ‘bundles’ of tracks, priced at £7.99 for 10, £9.99 for 15, £25 for 40 and £50 for 100. According to Spotify’s Gustav Soderstrom, that’s a result of hours of research into how people use the service. Instead of selling them albums, he says people want to buy playlists they’ve put together themselves – behaviour iTunes has yet to recognise.

It’s doubtful Apple is quaking in its boots just yet. To begin with, it’s rumoured to be planning to launch its own streaming service designed to out-compete companies like Spotify. And the company still has a stranglehold on the market, and clashes with record labels across the pond means Spotify has yet to launch in the US. But it’s a start. And given that iTunes has 200m-odd customers, if even a fraction of those switch over to Spotify, it won’t be doing too badly at all.

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