Spotify Has Arrived Stateside: Here's What You Need To Know

Originally published on July 14, 2011 10:19 pm

The music streaming service Spotify, which was launched in Sweden in 2008 and has been eagerly awaited by tech-savvy music fans in the United States for the last year, has launched its U.S. version.

The service has won over users in Europe — and generated anticipation here — by offering a simple service: a huge catalog of music that can be streamed, combined into playlists and accessed from any computer with an Internet connection, all for free.

That four letter word — F-R-E-E — is the major difference between Spotify and other streaming services that have taken hold in the U.S. with varying degrees of success while Spotify was growing in Europe. Rhapsody, Rdio, MOG and other services that offer subscription access to large databases of music all charge a fee for access. In order to offer its free version, Spotify has spent the last year negotiating licensing deals with the four major labels in the U.S.; The New York Times reported yesterday that it just finalized a deal with the fourth, Warner Music Group, on Wednesday afternoon.

Ease of use and catalog size are the second and third tentpoles for Spotify. Ken Parks, the company's chief content officer, describes the service as "dead simple."

"Picture a shelf of music in your house with 15 million records and with one click you can sort of pull down any record and start listening to it within a fraction of a second," Parks says.

You'll deal with some restrictions if you want to use the free version. It comes saddled with a few advertisements, as well as limits on the number of hours you can listen each month — 20 for the first six months of your membership, 10 after that, and you can listen to each song only five times per month*. More importantly for the time being, it will also require an invitation from the company, which you can request at its website.

*Update (7/14/11 at 5:30pm): The limitations will actually work a little differently than we originally reported, according to Spotify. If you manage to get an invitation, you'll have unlimited PC access for six months, with ads. After six months, the limit will be 10 hours per month and 5 plays per track. After the invite-only phase ends, Spotify will offer the regular free service to everyone, but at that point the introductory six-month offer will include a cap of 20 hours per month.

And of course, while Spotify's new ads tout "free!" as the service's biggest selling point, what the company actually wants is paid subscribers. Indeed, users who want to skip the ads and the wait for an invitation can sign up for one of two paid plans right now: "Unlimited," for $4.99 per month, gives you the service ad free and without time limits; "Premium," for $9.99 per month, adds features like mobile access, an offline mode that allows access to stored playlists when you're not on the Internet, and "enhanced sound quality."

Spotify calls the step up from free streaming via the web to premium usage on mobile devices a "freemium" model. Mark Mulligan, a U.K.-based journalist who writes the Music Industry Blog and has used Spotify for a year and a half, says at the lower end, the service "strips down digital music to the bones." It's particularly good, Mulligan says, at using technology to make the complications of the business invisible. "You click, it plays, and it's just there."

The question that remains is whether the limitations on the free plan, once they're in place, will act as an impediment to free users or prompt them to buy into the fee-based plans. Mulligan says that in the U.K., both things have happened.

"Spotify went from having a highly engaged user base of coming over 10 million users," Mulligan says. "By the start of 2011 they reported that they had converted 1 million people to the premium subscription, which was a huge achievement, but that their active number had fallen to 6.7 million. They'd essentially lost about a third of the user base as active users."

All of the plans in the U.S. version of Spotify include integration with Facebook — you can make playlists with friends and see what other people like — as well as the ability to import the music you own into your library.

Even the "Premium" service isn't completely comprehensive. Spotify has made deals with the four major labels, but there are some big indie holes. Searches revealed that recent albums by Gillian Welch, Shabazz Palaces and Ty Segall haven't made it into the service's catalog yet. If you own those albums, you can have Spotify search your hard drive and add them to your library, but you can't go to Spotify to sample anything from, say, Sub Pop**. Not yet, anyway. If the demand for the service matches the anticipation, there probably won't be many holdouts for long. Spotify says it's currently got 15 million songs in its database, and claims to be adding 10,000 each day.

**Update (7/13/11 at 5:30pm): Spotify clears this up as well. They do, in fact, have a contract with Sub Pop. The fact that a number of albums from the label weren't available this morning is due to the fact that they're still in the process of loading many songs into their digital catalog.

Glenn Peoples, a senior analyst for Billboard magazine, says that the combination of catalog, ease of use, and flexible pricing might attract the audience that has eluded streaming services in the past.

"I think that Spotify's freemium model is an acknowledgment that not everybody puts the same value on music," Peoples says. A truly attractive streaming service is "something the market hasn't seen yet. Something that really attracts not just hard-core music people but mainstream people and price-conscious people and people who were pirating music before."

Peoples says that Spotify will test the question of whether the U.S. audience will ever use a subscription model.

We'll keep using the service, and offer updates later, but if you're using Spotify now, let us know what you think. What do you want from a music player?

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And I'm Robert Siegel.

Spotify has arrived in the United States. It's a free streaming music service, and it's already big in Europe. Spotify has been available there for nearly three years.

Jacob Ganz reports on how the company hopes to make it big stateside.

JACOB GANZ: Here's the key thing to know about Spotify - according to Ken Parks, the company's chief content officer - the service is built on the idea that listening to music should be easy.

Mr. KEN PARKS (Chief Content Officer, Spotify): Picture a shelf of music in your house with 15 million records and with one click you can sort of pull down any record and begin listening to it within a fraction of a second.

GANZ: The service lives up to its promise, says Mark Mulligan, who writes the Music Industry Blog from his home in the U.K. Mulligan has used Spotify since it launched there a year and a half ago, and he says the company has done a good job of appealing to all kinds of users.

Mr. MARK MULLIGAN (Music Industry Analyst): One of the things which Spotify did as they designed this vision right from the start was really sort of looking at how they could unlock the mass market. When you look at services like Rhapsody and MOG and Rdio and - you know, and Napster as well, what makes those stand apart is they're really sophisticated user experiences, lots of content creation and content curation, things that really get the music aficionado engaged. But engaging the music aficionado alone isn't enough. And it clearly hasn't been enough for Rhapsody and the rest.

GANZ: So Spotify's plan puts the emphasis on three temporal concepts: along with being simple, it has a huge catalog and it's free. The catalog issue was resolved in the U.S. just this week when Spotify finalized a deal with the last of the four major record labels. And, of course, the free part comes with a little catch: Users have to listen to 15-second ads. Spotify will split the revenue with labels. And after an introductory period, there will be limits on the amount of music free users can listen to.

Ken Parks hopes that if you like the free service, you'll pay for an upgrade.

Mr. PARKS: For as little as 4.99, users can strip away the ads, and the top-tier service, our 9.99 premium service, allows users to put that music on their mobile devices and also enjoy offline access, so you don't have to worry about whether you're in range of Wi-Fi or the Internet.

GANZ: Spotify calls the combination of a free service with a premium service freemium. The other thing that sets Spotify apart is streaming. It's not a storage locker like the Amazon Cloud Player or Apple's iCloud, both of which launched while Spotify was negotiating with the major labels. You don't have to upload music you own, just search, click and listen.

Glenn Peoples, a senior editorial analyst for Billboard magazine, says it works well enough and it's flexible enough that it might attract the audience that has eluded subscription streaming services in the past.

Mr. GLENN PEOPLES (Senior Editorial Analyst, Billboard Magazine): I think Spotify's freemium model is an acknowledgment that not everybody puts the same value on music.

GANZ: Peoples says Spotify will test the question of whether listeners in the U.S. will ever use a subscription model.

Mr. PEOPLES: That's something that the market hasn't had yet, something that would really attract not just hard-core music people but mainstream people and price-conscious people and people who were pirating music before. You know, it can put up some big numbers.

GANZ: As the Music Industry Blog's Mark Mulligan puts it, Spotify's technology is blurring the distinction between a download and a stream. If it works in the States, he says, in five or 10 years, we might just stop caring about whether we own music at all.

For NPR News, I'm Jacob Ganz. Transcript provided by NPR, Copyright NPR.