article

07.14.11

iTunes' New Rival

The world’s coolest Internet music service has finally arrived in the U.S. Listeners who hate downloading songs should rejoice, says Dan Lyons—and Apple should shudder.

You know what would be awesome? An online service that lets you listen to any song you want, whenever you want. Forget about buying CDs and ripping them to your computer, or buying digital downloads from Apple’s iTunes store. Just think of any song you want to hear, click a button and there it is. You don’t need to “own” it at all.



That’s what Spotify does, and the big news today is that this service, which originated in Sweden three years ago and has been a huge hit in Europe, is now, finally, available in the United States.



This is music to the ears of geeks all across the country—except, perhaps, in Cupertino, California, where Apple is headquartered.



Apple, you see, has spent the past eight years building a big and booming business around selling digital downloads of music via the iTunes Store. As of last year Apple had sold more than 10 billion songs at a dollar a piece, sometimes a bit more.



But in techie jargon, what Apple has done with the iTunes Store is called “paving the cowpath.” They just took an existing, old-fashioned business model—one that dates back to before the Internet—and replicated it in a new technology. Just as vinyl records gave way to CDs, CDs gave way to digital downloads. But the model remained the same: you still had to buy albums, or singles. And you still had to manage your music collection, which for some people (myself included) meant grappling with an increasingly unwieldy roster of thousands of songs.



Things got even messier when iPods and smartphones came along, requiring you to keep a central repository on your home computer and then sync it up with your mobile devices. Oh, and you also needed to back up that home computer somewhere, or risk losing your collection in a hard-drive crash, which could mean even more external devices floating around.



Spotify, on the other hand, represents a dramatic break from the past. It’s basically on-demand radio. Whatever song you want to hear, you go get. You don’t need to own and manage a huge collection of songs. It’s as if you “own” every song in the world (or at least the 15 million in Spotify’s library) and can do whatever you want with them. You can make playlists, just like on iTunes. And you can share songs or playlists with friends by simply emailing them a link.



There are three price levels. For free you can listen to all the music but you have to sit through ads. For $4.99 per month you can get an ad-free unlimited plan. And for $9.99 per month you get Spotify Premium, which lets you put Spotify on a mobile device. The paid versions also let you upload your music collection into Spotify. 



Ah, but what happens when you’re not connected to the Internet? If you’re a premium member you can designate some tracks as “sacred,” and they’ll be copied to your computer or mobile phone so you can take them with you anywhere. (Up to 3,333 tracks per computer or mobile device.)



This is music to the ears of geeks all across the country—except, perhaps, in Cupertino, California, where Apple is headquartered.

Spotify isn’t the only company doing this. There are others like Rdio, Pandora, and Last.fm in the space. But Spotify is the biggest, and, according to geeks, the best, thanks to a clean user interface and really fast song streaming. Spotify has 1.6 million paying members and 10 million total users.



Should Apple be scared? Maybe. The company is moving into the “cloud music” space by offering customers the ability to store their music collections on Internet servers. Amazon and Google are doing the same thing. Apple also might come out with its own music-streaming service developed by a company called Lala that Apple acquired in 2009.



But Apple still faces the challenge of trying to take an old business model and morph it into something new. In tech the winners are often those companies that start fresh on a new platform. Apple needs to move quickly, before Spotify gains a foothold in the U.S.