While no big secret — potential users have been able to sign up for an invite for about a week now — today’s official launch of Europe’s hottest streaming music service, Spotify, has been a long time in coming, the lag primarily due to wrangling with music labels here in the U.S.
Spotify will begin sending out invitations today to a limited number of users who have entered their email on its U.S. portal. Those lucky enough to snag an invite will be privy to unlimited listening of the company’s estimated 15 million tracks.
Once the service comes out of trial, new users will be allowed up to 20 hours of listening per month, or they can pay $4.99 per month for unlimited privileges on a desktop. There also will be a mobile app, which will offer unlimited access for $10 per month. Those prices are in line with existing offers from services like Rhapsody here in the U.S.
Giles Cottle, principal analyst at Informa Telecoms & Media, says the road ahead is still uncertain for Spotify.
“The U.S. is absolutely crucial to Spotify’s long-term plans,” Cottle said in a statement issued this morning. “The only way Spotify can grow into a viable financial model, and move towards placating labels and rights-holders, is by amassing a huge number of users.”
Cottle says music streaming will always be a low-margin, high-volume business, and the U.S. helps Spotify towards achieving the latter. And yet, none of the major streaming services — Rhaposy, MOG, etc. — have broken through a million paying users.
In fact, Informa estimates that there were only 2.5 million paying music subscribers in the U.S. in 2010, including paying users of Pandora (customized radio) and eMusic (MP3 bundles), both very different offerings to Spotify. So despite the competition, there is a definite gap in the market for Spotify and an opportunity for it to grow said market.
But Cottle notes that if all Spotify manages to do is poach a few users from its competitors, the launch “must be deemed a failure.”
Spotify may have at least a minor leg up on some of the existing services in the U.S., none of which have a free element. “The fact remains that Spotify would not have got one million plus paying subscribers in Europe without being able to introduce users via the free service. It may not get that many, even across the vast swathes of the U.S., if it is forced to cap its free offer too quickly,” Cottle says, noting that music label execs are still nervous about the effects of offering any kind of free streaming service.
In conjunction with today’s launch, Spotify announced Motorola as an exclusive partner. Motorola Mobility, Spotify’s mobile device and tablet partner, will be launching a number of marketing campaigns in the coming weeks to offer its customers early access to Spotify’s on-demand music streaming service.
The two companies are giving away a limited number of invites before the service becomes available to the general public. Motorola is telling consumers to stay tuned to the company’s Facebook and Twitter pages to learn how they can receive an invite to Spotify.
