Spotify's new iPhone app poses threat to Apple



Spotify, the website that offers users free access to a huge library of music without any need to download (it is live streamed), is looking set to ruffle more than a few feathers at Apple with the new app it’s trying to get on the iPhone.

The music site still in beta that The Times calls ‘probably the hottest web start-up to come out of Europe since, well, forever’ is taking the music and tech superpower head on by attempting to offer iPhone users unlimited music that can be stored on their phone and listened to when on- or offline. Which, of course, would compete directly with iTunes.

The Spotify blog explains: “Our iPhone version is very similar to the Spotify you’re already familiar with and will allow you to listen to your music even when you’re not connected to a network.”

Spotify will offer their service for £9.99 a month – about the same as the cost of the average album on iTunes, making Spotify the obvious first port of call for anyone wanting to access that much music or more in a four-week period.

So why would Apple ever allow the app on one of their products, at the risk of denting their own sales potentially very seriously? Well, according to TheTimes, ‘Spotify has a nice PR line that a “no” from Apple would be anti-competitive’.

Plus it won’t do Spotify any harm that it’s already received national press attention for the app and has released the video you see above explaining it to users, getting the good old force of consumer pressure behind it - so that if Apple did reject the app it would risk losing favour with current fans.

But TheTimes opens up an interesting discussion about the competitiveness of the two services, and points to Spotify’s struggle for revenue - currently the free version of its service, where users can listen to unlimited music occasionally interrupted by adverts, is vastly more popular than the premium service, where users pay £9.99 a month for ad-free live music streaming.

“The big question is whether Spotify is a real threat, or more like YouTube – a popular service in desperate search for a business model,” the paper writes. “The website clearly does not have enough adverts to pay for the royalties of the songs played from it.”

But BBC technology correspondent Rory Cellan-Jones counters the revenue argument by suggesting the realisation of the iPhone app would be exactly what the startup needs to start making serious money. “It’s basically a weapon in Spotify’s hands aimed at getting people to upgrade and actually pay for the service rather than getting the free service supported by ads. Not many people have done that so far. Spotify is hoping that this will be its secret weapon.”

Then again, there is another viewpoint that suggests the Spotify app wouldn’t be quite so damaging to iTunes as first impressions might suggest. Leading technology blog TechCrunch says: “It’s common tech industry knowledge that Apple makes fairly meagre profits from iTunes, as it’s largely a honeypot to get consumers to buy Apple hardware, sales from which form the bulk of their profits. So Spotify would not compete nearly as much as you might think - plus, making it a subscriber-only application on the iPhone further creates a barrier to competition with the iTunes store.”

And, following that argument, the Spotify app could even be an advantage to Apple – as it may encourage current Spotify users to buy iPhones specifically to access the service. (Although of course that may detract from iPod sales.)

We’re big fans of Spotify, and we hope its plans come to fruition. Whatever happens, it’s always edifying to watch a feisty and seriously innovative young startup posing a serious threat to a market monopoliser.

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