Spotify made headlines last week following its December 11
that it now offers mobile users free on-demand streaming access.
With the change, tablet users can listen to playlists and artists
of their choosing, replicating an experience once available only
using a desktop computer. (Smartphone users can also create
playlists with this change, but they must listen to their playlists
in shuffle mode.) Though these free options still require that
listeners tolerate advertising interruptions every few songs, the
$10-per-month fee that Spotify mobile users were once required to
pay to access on-demand listening features has been removed,
presenting a free, tangible benefit over competitors like
), iTunes Radio from
), All Access by
), and Xbox Music from
The news comes on the heels of Spotify's latest round of funding,
including a $250 million investment by Technology Crossover
Ventures, resulting in a current company valuation of about $500
million. Despite that success, Spotify's 24 million active user
base still pales in comparison to
72.4 million active users. Regardless, the strategic move will
likely fuel Spotify's acquisition of more paid subscribers.
Spotify's vice president of product Charlie Hellman recently told
that "we've found that the more stuff we give users, the more users
are willing to pay us."
is designed so that rights holders (labels, distributors, and
publishers, who in turn, compensate artists), earn about 70% of all
revenue, making it
a more artist-friendly service than Pandora
according to most arguments. So the latest news should create an
even greater divide between Spotify and its other streaming-music
competitors. That said, the biggest threat that both Spotify and
Pandora will face in the future may not come from the usual
suspects, but rather, a name not yet known to many listeners in the
Enter Deezer, the market leader for streaming music in Europe. The
France-based company is largely backed by Len Blavatnik, who owns
Warner Music Group, and is rumored to be planning an entrance to
the US market in 2014.
What can it offer listeners that Spotify, Pandora, and others
can't? If it continues to employ the strategic-partnership strategy
that has fueled it to acquire more than 5 million paid subscribers
since the company was founded in 2006, its success in the States
could have less to do with
it offers and much more to do with
it links up with.
Since 2010, Deezer's growth has been largely dependent on strategic
partnerships with mobile providers like French Telco Orange, Orange
UK, Belgium's Belgacom, and T-Mobile in Austria, who bundle the
costs of the music service with their customers' wireless
contracts. Deezer has grown nearly as quickly as Spotify, and
that's without serving listeners in two key markets: the United
States and Japan. In early November, Deezer CEO Axel Dauchez
reported that in just one year the company had more than doubled
its pace for attracting paid subscribers.
Most recently, Deezer
that discounted, premium services would be made available to
customers of Asia's mobile operator M1. It also formed an
international partnership with
) in 2011, and released an integration with Google+ earlier this
year. According to Dauchez, nearly 75% of Deezer listeners use the
service on mobile devices. (Similarly, Pandora also cites that
about 80% of its music is streamed over mobile/connected devices.)
Though it's tough to discern whether Deezer's paid subscribers
listen based on preference for the service versus the fact that
they access it by way of the deal they receive with their mobile
package, the company appears to be succeeding by leading with a
different foot than its streaming competitors.
Deezer will hit the United States has yet to be confirmed, but that
it will do so by way of some sort of partnership is almost certain.
In June, Deezer told
: "We are considering the US and are looking for the right
strategic partner to go with. Perhaps it'll be an established,
existing big company in the US which will make us significantly the
biggest in the country. "