Services/apps mobile

Spotify Hits US 3G Networks

Spotify made its long-awaited U.S. debut Thursday, promising users a streaming music service that will run well on operators' 3G networks.

The music application will be available to U.S. consumers as an invite-only (for now) free, ad-supported mobile and desktop app or as a US$4.99 paid subscription service for access to its millions of tracks.

Motorola Mobility LLC is partnering with the company at launch, giving its customers early access to a $9.99 Premium version of the on-demand service that lets users stream to Android-based smartphones. The Premium service will also run on iPhone, Symbian Ltd. , Windows Phone and Palm Inc. devices. (See Spotify Launches App for iPhone, Android.)

Here's Spotify tooting its own horn:

Why this matters
Spotify is the type of service that will show the true power of 4G Long Term Evolution (LTE) networks in terms of speed and latency, but it will also test the limits of operators' already-stressed 3G networks in the U.S. The company says it expects to perform just fine on 3G. Its FAQ recommends 256Kbit/s for optimal performance. (See Happy Birthday, LTE! )

The site says: "Spotify usually works well on a 3G connection. Plenty of free disk space also helps keep the network requirements down as it enables more caching."

The U.S. will be a critical market for the company for more than just performance, however. Spotify's rampant success with more than 10 million Europeans earned it a spot on Light Reading's list of companies to watch this year, and could give other music services such as Rhapsody Networks a run for its money. (See Leading Lights: Mobile Services/Apps Finalists.)

Getting to the States was no easy task, either. Negotiations with music labels have held the launch up for nearly two years, and the app's success will depend on its ability to scale, as well as to forge partnerships with wireless operators. Informa Telecoms & Media says Spotify could fare well if it can replicate what helped it win over Europe and feed off the strength of its free service. (See Virgin Media Teams With Spotify and 3 UK Teams With Spotify.)

"In a sense, it must simply repeat the formula that has served it so well in Europe: A clean, intuitive user interface, deep links with properties like Facebook and Last.fm (a Pandora deal is not out of the question) and high penetration across mobile handsets and other devices," Informa Principal Analyst Giles Cottle writes in a research note.

For more
Read up on streaming music and its effect on wireless networks:

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 4:59:19 PM
re: Spotify Hits US 3G Networks

Spotify is huge in the tech community, but it'll need a big marketing push to attract more every-day users in the U.S. That being said, the service is pretty cool -- and unique in that it's free with no limits. I think it'll do well here.

jepovic 12/5/2012 | 4:59:17 PM
re: Spotify Hits US 3G Networks

I think it will be a huge success, if the record industry lets it. The deal and the company's media-based owners suggest that it will be allowed to succeed. I wouldn't be surprised if they have a million paying users in the US within a year, and ten million in 2-3 years. They have reached 1 million paying customers within a couple of years in Europe, with little marketing and limited geographical coverage.

The service is highly addictive and melts very well with social media like Facebook. Here in Sweden, many people now stream music from Spotify instead of listening to CDs or mp3s from iTunes. One of the cool aspects of Spotify is how new music spreads virally, rather than through centrally controlled marketing.Technically, Spotify is nothing revolutionary, but then again so wasn't Skype.

The telcos? They love it. It's a premium service which actually works in the true sense of the word: Customers are willing to pay extra for it. They even bundle it with subscriptions.

sarahthomas1011 12/5/2012 | 4:59:13 PM
re: Spotify Hits US 3G Networks

Very good points, jepovic. I don't think consumers in the U.S. will scoff at having to pay $10 per month. Seems like money well spent for music fans.

FastCache 12/5/2012 | 4:59:12 PM
re: Spotify Hits US 3G Networks

Spotify fits well with mobile. What's there not to like about having a huge music catalog available to you while on the move?

For mobile carriers it is one of those apps where they can showcase the quality of their 3G network. Streaming music is certainly less demanding than the video services that are prominantly discussed in the industry.So the customer experience should be great.

Interesting to follow how this European developed mobile app will fair in the US market. 

jepovic 12/5/2012 | 4:59:11 PM
re: Spotify Hits US 3G Networks

For consumers, it's perfect. For content owners, it's certainly mixed feelings since Spotify competes directly with CD and iTune sales.

Perhaps the most impressive and interesting achievements by Spotify are the deals they have struck with the media companies. After all, why would they agree to give access to pretty much their entire catalogues for the price of one CD per month? Sweden was one thing, a small market obviously explored for test purposes. The US market is something completely different, and I'm quite astonished that a European startup has been awarded these contracts.

In Sweden (and probably the US), Spotify pay media companies per downloaded song. Obviously, they don't pay much. One of the more controversial aspects is that some artists are complaining heavily about the ridiculously small revenues they get from Spotify (less than 0.1 US cents per download). Also, tha record companies typically take the same share of the Spotify revenues as of the CD sales, although their contribution to the value chain is much smaller.

For once, I think the music industry is being bold and progressive, and I think they deserve lots of credit for that. It will be very interesting to see how the debate will develop in the US once Spotify gets some momentum. The content side is the real challenge for Spotify in my opinion, not the technical aspects.


FastCache 12/5/2012 | 4:59:06 PM
re: Spotify Hits US 3G Networks Maybe better to contrast Spotify to the music radio experience rather than directly with CD sales. It is a marketing channel where you can really learn about your customers' tastes. If the customer really likes a track maybe they will still purchase a high quality recording of that for their music collection.
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