Monday, September 21, 2009

Spotify, can it survive a Free to Premium (Freemium) Transition?

Spotify, one of the most talked about music services yet to be in the U.S., founder Daniel Ek recently admitted that a little less than 10% of it's users in the U.K. actually have upgraded to the ad-free pay subscription Premium model in an article in The Guardian. A lot of people are trying to look at this in many ways as those types of numbers will not make Spotify profitable based on their current arrangements with the labels, but their capital reserves (venture capital money) will allow them to survive for awhile. But what really is the problem? Again, I haven't had the chance to use Spotify but my instincts tell me stripping away the ads aren't enough for the casual (and largest group) user to pay. Most people see value when they GET something the other group doesn't and NOT getting ads appears isn't enough. Spotify may have backed their way into a corner here if they start offering unique content to subscribers only but until they offer a better business model we may once again see doom for yet another ad-supported music play, regardless of how easy and well laid out it is. Total Live Music is built with the intent of a Free to Premium (Freemium) play, however it's much easier to see that the free content is the aggregated live music media from the web with the Premium content being future shows captured exclusively for Total Live Music's portal, giving the end user a clear distinction to the value of the proposition for upgrading.

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