Spotify has heard the critics and has responded in kind. In an announcement at an event earlier this week in New York City, the music streaming service made a number of significant announcements that could alleviate much of the criticism that’s been leveled at it, at least for the moment.
One of the major issues with Spotify has been that you needed to be a paid subscriber in order to enjoy its mobile app. On Monday founder Daniel Ek announced that the app will now available for free not only on smartphones, but on tablets as well. The free version will still have adverts, and will add a Shuffle option that allows you to randomly play songs from within an artist’s catalog, instead of picking the exact song to play right away.
The second big announcement was that Led Zeppelin’s entire catalog will now be available on Spotify. Zep ZEP -0.66% is one of the last of the major acts to withhold their music from any and all streaming services, so it’s noteworthy that the band has finally allowed this to happen.
The two announcements may sound modest on the surface, but they definitely play into a long-term strategy behind the scenes. By allowing the free version of the Spotify app on smartphones, the company can now expand it’s user base significantly, especially since its now available in 55 countries (a figure also announced at the event), many of which have more smartphone than desktop computer users.
Market share is everything for streaming services at the moment, as both Spotify and Pandora are girding themselves for the impending assault by iTunes Radio, Google GOOG +1.15% Play All Access, YouTube Music and Beats Music. There are a lot of cell phone users who haven’t settled on a favorite streaming app yet, so Spotify wants to gain a foothold before the competition, and having its app on as many smartphones as possible is the way to do that.
The Led Zeppelin announcement is significant in that it’s now apparent that the band understands that they can garner some meaningful revenue through streaming. This is a turnaround in reasoning from only a year before, when streaming was considered something that cheapened a legacy product without providing much of an upside. Now it’s seen as a new revenue stream, and promises to be a significant one at that. The band has never been fools business-wise, and they obviously see the writing on the wall when it comes to the new streaming world we now live in, so a change in direction was needed. What’s more, the Zep catalog will be exclusive to Spotify, which is a big win for the company and is a counter to the anti-Spotify outbursts from other artists.
Spotify faces a threat to its leading position in on-demand streaming but these announcements send a message that it’s not standing still. While other services are just getting into the game, Spotify continues to move forward. That’s what market leaders are expected to do, but few meet the challenge. Look for 2014 to be a most interesting year in the online music business, as the heavyweights will all be there to duke it out.
