After almost two years of anticipation, Spotify finally became available in the U.S. this week.Investor Sean Parker immediately predicted that it would change the music landscape.
It’s got a lot of great points — particularly the six months of free music with no listening caps (for invited beta testers).
But it’s also very similar to a ton of other services that have come before. None of which have really taken the world by storm.
Here’s a rundown of all the subscription music services out there today — as well as some cautionary tales from past music services that never caught on.
It took more than a decade for Tim Westergren (shown here) and Pandora to get there, but with its recent IPO filing Pandora is now the big kahuna of independent music services.
Pandora does NOT let users choose individual songs, but instead builds custom radio stations around particular songs and artists. But it does have a subscription service that lets users listen without ads. That subscription service made up only $12 million of its $90 million in revenue for the first 9 months of 2010 (the rest was advertising.)
Because Pandora is online radio and not music-on-demand, Pandora pays much lower rates than on-demand services. Even with that -- and a popular iPhone app -- Pandora lost $328,0000 in the first nine months of 2010.
Rhapsody was a pioneer in subscription music services, and offers basically the same thing as Spotify -- minus the six-month free trial. But after almost a decade in business, and a big cross-promotion with MTV (which part-owned the service for a few years along with RealNetworks), it still has only 800,000 subscribers and is just starting to show positive cash flow, according to President Jon Irwin.
Irwin also notes that Spotify's free service doesn't have a mobile component, and mobile has been driving Rhapsody's growth in the last two years.
Sony launched Music Unlimited by Qricocity in February, and just added support for Android phones in June. Despite the company's well-publicised security problems, Sony is a massive company with a huge marketing budget and a built-in audience of tens of millions of PlayStation users. Plus, the pricing on the non-mobile part of the service is only $4 a month -- a buck cheaper than Spotify (and other contenders). Oh, and Sony is one of the four major labels -- the folks who made licensing so tough for Spotify.
Microsoft actually had one of the earliest subscription services -- the Zune Pass, which launched with the company's ill-fated iPod competitor back in 2006. The Zune is more or less gone, but the Zune Pass lives on and delivers on-demand music to Windows Phone, Xbox Live, and Windows PCs. It's more expensive than other services -- $15 a month -- but also gives users 10 free permanent MP3 downloads, which is a value of about $10.
MOG is another streaming music startup that launched around the same time as Rdio in early 2010, but hasn't gotten quite as much love, although Billboard Magazine thought it was the best music streaming app of the year last year. It is trying to stand out by offering both on-demand music and auto-playlists based around particular artists, with a slider that lets you control how much variety you want.
Grooveshark offers all the music you want for free online, with optional subscriptions for ad-free listening ($6 a month) and mobile access ($9 a month). It sounds too good to be true. That's because it IS too good to be true: Grooveshark launched its service without permission from the record labels and publishers, and is now bogged down in a lawsuit with big label Universal. (It already settled with EMI.) Most industry insiders don't expect it to survive.
eMusic is another long-time survivor but works a little differently: instead of paying a subscription fee for on-demand streams, you pay to get a set number of downloads per month. It's nice because if you stop paying your subscription, the songs still work -- unlike most other subscription services (Microsoft's Zune Pass is an exception). It claimed 400,000 subscribers in 2008, but hasn't publicly updated its numbers since then.
This is former CEO David Pakman, who left in 2008 to become a partner at Venrock.
Thumbplay launched a streaming music subscription service around the same time as MOG and Rdio -- its big claim to fame was being the first subscription service on BlackBerry. But Clear Channel bought the company's cloud-based music services earlier this year, and Thumbplay Music now redirects users to Clear Channel's free online radio stations.
Lala wasn't a straight subscription service -- instead, it let users buy permanent song downloads for $0.79, or permanent streams for only $0.10. The company was bought by Apple in late 2009 and shut down a few months later. Later this year, Apple will launch a cloud-based music service that scans and matches your iTunes library to deliver streams from the cloud -- a feature that Lala had.
Lala head Bill Nguyen (shown here) went on to found a new startup, colour, which has gotten a lot of attention -- the wrong kind -- for its $41 million pre-launch funding and confusing first product launch.
Imeem isn't really in the same category as these other services, but the short-lived service got a lot of publicity for offering songs on-demand for free. It was the first commercially available free music service to strike deals with all four major labels. Turns out that ad rates couldn't support Imeem's payments to the labels, and the company was eventually sold to MySpace for a rumoured price of less than $1 million and shut down.
Imeem leader Dalton Caldwell (shown here) gave a great speech last year about why digital music is such a hard business to be in -- a cautionary tale for Spotify and every other contender.
Caldwell went on to lead a new company, Mixed Media Labs, which launched a photo-sharing app called PicPlz earlier this year.
The giant of digital media, Apple, has resisted a subscription music service but could add one if Spotify ever takes off.
Amazon has a subscription-based service for storing digital media files -- Amazon Cloud Drive -- and an MP3 download store, so it could move into subscription music as well.
Google recently launched its own storage service, Google Music Beta, and while the service is free today, Google might begin charging for it someday, and is rumoured to be interested in a subscription service as well -- if it can ever come to terms with the labels.