Success with the Apple’s iTunes Music Store has encouraged more licensing deals between music companies and a variety of legitimate online digital music services. According to the IFPI Digital Music Report 2011, there are currently more than 400 licensed digital music services, many of which offer a catalogue of 13 million tracks. “The record industry is more open to new models now than it has ever been,” said Mark Piibe, the global head of digital business development at EMI Music. “We are experimenting in ways that we wouldn’t have considered three years ago, and we are also getting a lot more sophisticated about the differences between markets” (IFPI Digital Music Report, 2011). Although not a new concept, the music subscription service model has seen some growth in popularity in recent years, likely due to advances in broadband and portable technology.
Based out of Sweden, Spotify is a music streaming service that has seen recent success in the digital music market, having licensing deals with all of the major record labels as well as numerous independent labels. Instead of purchasing individual songs, users are able to access nearly 15 million songs through the Spotify software on their computer or smart phone application. CEO Daniel Ek said, “We’re educating people into moving from ownership to access” (IFPI Digital Music Report, 2011). In addition to its unique business model, Spotify allows users to share their playlists with friends via Facebook, Twitter, and e-mail. In this “freemium” subscription model, users are able to choose from three plans: free, unlimited, and premium. Users with the free plan are subject to advertisements. The unlimited plan offers ad-free listening for about $5 a month. Users with the premium plan pay $10 a month for ad-free listening with smartphone access and the ability to make offline playlists that are available without an Internet connection.