With the debut of Spotify in the US, the extinction of the CD draws near. The new streaming music service has already made a big splash in Europe, offering users a convenient way to listen to their favorite artists and spend less.
With Spotify, users pays a monthly fee, granting them access to an enormous catalogue of music. This differs from services such as Apple’s (NASDAQ:AAPL) iTunes, where fans purchase individual songs and albums. The catch is that Spotify users are only able to listen to a particular song a set number of times. In essence, Spotify gives users a way to try before they buy. However, given the short-attention of today’s music-lovers, this “sampling” might be enough to tide them over.
Spotify also has the added benefit of very few competitors. It doesn’t really compete with iTunes and, unlike Amazon’s Locker (NASDAQ:AMZN) or Google Music (NASDAQ:GOOG), Spotify isn’t uploading anything to a cloud. However, Spotify may easily draw music listeners away from SiriusXM (NASDAQ:SIRI) and Pandora Radio (NYSE:P). Spotify’s only apples-to-apples competitor at this point is Rhapsody (NASDAQ:RNWK)(NYSE:VIAB). It will be interesting to see how both companies attempt to distinguish themselves as Spotify brings its service stateside.
So will Spotify and its competitors pave the way for the future of music and what will this mean for the industry? Unlike many previous streaming music companies, Spotify has deals with all the major labels including Warner Music Group (NYSE:WMG). While the profits don’t quite equate to those of CD sales, for record execs Spotify is nonetheless a preferable alternative to pirating.