Is Spotify Doomed? An Alternate Reality Analysis
As the region's reigning consumer web champion, there can never be enough stories about Spotify. And since today they've released a verison for Android and some new user & track figures, it's a good time as any to wonder what the future might hold for them. Especially in light of Apple's recent acquisition of US based La La Media. Caught on tape at Le Web, Spotify "Consigliere" Shakil Khan announced that they now have 7 million users in 6 countries choosing from 6.5 million tracks and listening for an average of 80-90 minutes per user.
When asked the million billion dollar question about when the service will launch in the US, Khan reiterated the 1Q10 time frame that has been given before. Interestingly, he also said that one of the main delays has been setting up a corporate infrastructure in the US including "business licences and visas," as well as operations and ad sales teams in Los Angeles, San Francisco, and New York. Spotify has used this type of careful building since the beginning, and it is a credit to they way that they think about user experience, considering problems that would result from not being fully prepared as a degradation to the end service. However, with attitudes towards the non-ownership model changing rapidly, there will be an element of first-mover advantage to whomever can launch an insanely great streaming service in the US, and even more so if that first-mover happens to be called Apple. Will Spotify be dead-on-arrival in the US if Apple launches an iTunes streaming service before they're ready?
The answer, unfortunately, seems to be yes. If Apple uses La La's technology and executives to launch what would surely be an appealing service to go head-to-head with Spotify in the US, the advantage seems to tilt towards AAPL. Here's why:
- Apple's not venture backed. Even a reported war chest of as much as $250 million, might not help Spotify outspend Apple, with quarterly revenues close to $10 billion, on talent, technology and content. A some point, they'd have to throw in the towel.
- Spotify may be the best hope for the record labels, but at the moment it's iTunes that's paying the bills, and getting the leverage and perks of buyer power.
- Apple is, you know, kind of ruthless. They might be willing to keep the Spotify application in the app store, but it would just take a couple of tricks from Microsoft's "pre-installed IE" hat to get users hooked on streaming iTunes before they can even learn what a Spotify is.
This is all speculation, and of course it's fully possible that the US market is big enough for more than one successful player in this market. Nonetheless, we wish Spotify the best in all future battles!
What about the rest of the people who are not using iPhone or iPod touch? Do you think Apple would bring their iTunes mobile application to other platforms like Android and BlackBerry? Do mind that BlackBerry is much more popular in USA than iPhone. Or why do you see there is nothing left of the market if Apple gets its streaming service out before Spotify in USA?
iTunes and Safari are available for Windows, so why not for Android as well. My guess is that Apple is gonna slaughter Spotify.
I think this is overly negative.
1) Spotify is backed by the labels - who have no love for Apple. If the labels decide Spotify wins, then it wins. You own a major label - what do you do? You help the company you own part of, which plays nice with you. The last thing you do is help Apple maintain its monopoly.
2) Given how long it has taken Spotify and Microsoft to come up with their service, why do you think Apple will be able to launch in six months? You may be right but I'd think it's unlikely.
3) I don't know anyone who uses Spotify and Itunes, who prefers Itunes. The 100mb download every month is enough to annoy anyone.
I think you are overestimating Apple's speed in integrating Lala's technology into Apple's own systems and vision. Lala acquisition was quite small ($17M) so they didn't buy it to continue the service, but for tech and the team.
Quite contrary to what you posted, to me Lala acquisition indicates that Spotify is in a good position - timing wise - to enter US market
I think you are right.
Spotify can potentially find many powerful partners like BackBerry, Android, Nokia or Samsung who will certainly not let all this business go to Apple. Even though they are lagging on the app store front, embracing Spotify could create an interesting momentum. Also mobile service providers may back the Spotify streaming app vs. on-board iTunes, as it will increase their data traffic.
I love iPhone, but I hope Spotify will grow strong in US and other markets. Otherwise we will end up with one-man show (again).