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Spotify has received a lot of press in the last few days cause they are planning to move their European only service into the US market. The story was broken over at Forbes and I think this could be a very big move for the music industry as a whole. Spotify is a free ad supported music streaming service which allows users to listen to anything in their catalogue as often as they want. Spotify offers a free service which is advertising supports, a day of free advertising and then also a full unlimited service. Users can also build and store playlists; so that if you turn on shuffle, after awhile it feels like a Pandora Spotify mobilestation with only your favorites or the iTunes collection you wish you could afford.

Ive used Spotify since private launch and it is so addictive and one of the best services I have ever used. Their currently library has over 5 million tracks with thousands more uploaded on a daily basis. Spotify has attracted more than 2 million users in the UK and another 4 million across Europe. The company also wants to let you take you playlists with you anywhere you want.  An Android app is in beta and an iPhone app is being tested.

Key issues when entering the US market is:

  • Can they afford the crippling royalty rates that all the majors will want in the US? These rates already killed Spiral Frog and other services.
  • Microsoft UK executive already leaked that they are readying a launch of a competitive product that will be tied in with the Zune. However, it is Microsoft and they always seem to get new products wrong recently.
  • The economy needs to turn around because Spotify is 95% ad-supported. “If you look at the market today, who knows where it’s going to be in the next two, three years?”. Spotify founder Daniel Ek told Forbes. “We are doubling our revenues month-on-month–that’s a very good sign.”

Disclosure: RouteNote is currently a Spotify partner and will be allowing our artists to get their music onto the service in the coming weeks.