Music streaming service Spotify is trying to build a viable strategy for US entry. Currently the ‘freemium’ phenomenon is active in Europe only, and is trying to tinker it’s platform into a fully balanced, financially viable form before allowing it’s user base to expand at the incredible rate they saw before they limited sign-ups to invitation only. In the brief period between the end of ’08 and September of this year during which they opened the floodgates, they upped their roster to 5 million users, roughly 2% of which have signed up to the premium service, happily shelling out £9.99 a month for ad-free streaming, access to tracks offline and on hand-held devices (synching with desktops/laptops rather than streaming live on mobile broadband). Their costs can currently be estimated to outstrip their revenue, so they’ve got to find a way of enticing more of their free users onto the paid for platform, which they can principally do by adding value to the paid for package, reducing the price (which they may consider to be a mistake, given the huge amount of music that people will still stream), or just waiting for loyalty to induce a purchase (we all love them here in the RN office). An interesting point to consider is that the major labels that have signed deals with Spotify have also been given equity equal to roughly 18% of the company, so a win for Spotify is worth more to them than building on Apple/iTunes success in the long run. From a consumer’s point of view, I don’t think a better deal could possibly come along; all the music in the world for the price of a single CD purchase a month, available to put in your pocket on your phone (for which you’re probably paying £30 a month already), seems like a silver bullet to me, generating revenue for the industry and keeping costs down for the user while cutting the pirates out of the loop. I know free is very tempting, but as most music pirates are supposedly music lovers (I enjoyed the contradiction between the IFPI and the Daily Mail’s bubblegum reading of this survey), I’m hoping that the majority will see the light. Take the money you would have spent on the terabyte hard-drive to fill up with stolen music this year, and use the money to pay the premium subscription fees and fill your ears with lovely legal music instead. There’s also the possibility of Spotify expanding into video; I for one would throw the TV out, and stop paying the license fee if I could cache music TV and film in a Steam type model. We’re one of only a handful of distributors giving our artists the opportunity to get music onto Spotify, so we really hope they can balance the model and expand their user base, making more moeny for our contributors. I’m hopeful; their advertising team is still fresh and new to the problem, and bound to increase revenues as time passes, and further innovation and the addition of bells and whistles to the premium service will only become more enticing.