Posted by Tom Foremski - August 6, 2009
Spotify is one of Europe's most successful startups. It's a streaming music service with a large number of enthusiastic customers, and a business model that is already producing revenues.
Spotify is coming to the US and it is building a war chest. Recent reports say that it is close to securing as much as $50 million in new funding, giving it a valuation of around $250 million.
The Spotify business model relies on signing up subscribers at round $15 per month for unlimited streaming access to virtually any music. It also offers a free service that's supported by advertising but has a lower quality of service.
There are already a lot of streaming music services in the US and I've spoken with representatives of some of them. The general consensus is that the Spotify model won't work here. But that's the type of response you would expect from Spotify's rivals.
The company has a lot of momentum and it already has well established relationships within the music industry. But much will depend upon its user interface since this is the prime differentiator within the music streaming services sector.
Spotify has a great UI according to Lifehacker:
Imagine a music app with instant access to any song you wanted to hear. Imagine creating a playlist from those songs and quickly, easily sharing it with friends. Such an app does exist, it's called Spotify, and it could change music forever.
All the publicity around Spotify will be good news for the entire sector attracting users to try out music streaming services for the first time.
One source says that it will take a few more months before Spotify is ready to come into the US market. In the meantime, the US music streaming services companies are bracing themselves for what promises to be a very able competitor.
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