What is Spotify?

Spotify is a streaming music service that offers on-demand music streaming. Unlike customizable Internet radio services like Pandora, Spotify allows you to pick and choose exactly what songs you want to listen to. Spotify offers a catalog of over 15 million songs.

There are currently a number of similar services in the U.S., including Rdio, MOG and Rhapsody. What makes Spotify stand out is that it also offers a free, ad-supported version, while most of its competitors only offer short trials before users have to pay.

How Can I Get it?

Spotify is now open for business, but you either need to be deemed an “influencer” to get a free accounts or get a paid account (more details about those below). To see if you qualify for an invite, head over to Klout to see if you qualify.Klout is giving away about 100,000 free accounts this way. Just enter your Twitter or Facebook credentials and Klout will let you know if you qualify.

If you are willing to pay, you can skip the line and get an account at any time. If you want to wait for a free account but didn’t qualify for the Klout promotion, just give Spotify your email address and they will let you know when a space in the U.S. beta opens up.

What’s so Great About it?

A couple of things make Spotify stand out from its competition – besides the free tier. First of all, Spotify features a strong social component. Users can share playlists with friends or subscribe to other users’ public playlists (and see updates to these in real time). MOG offers a similar feature, but it’s severely limited in comparison with Spotify’s implementation. Spotify also integrates with Facebook and lets you discover what your friends are listening to on the service.

Spotify also offers great native clients for both Windows and OS X, as well as mobile clients for virtually all the major platforms, including iPhone, Android, Windows Phone, Symbian and the Palm Pre series.

Spotify uses a peer-to-peer architecture similar to Skype that uses a little bit of space on its users’ computers to cache popular songs and a little bit of every user’s bandwidth to serve these songs to nearby users. Thanks to this, songs play immediately, just like you would expect from your local iTunes library.

Talking about iTunes, Spotify also gives you access to your iTunes library right from its own app, meaning you don’t have to switch back and forth between the two.

Brilliant, But What Does it Cost?

Spotify offers a three-tier pricing structure:

Free: the free version will be limited to 20 hours of use for the first six months after a user signs up. After that, the limit will become 10 hours per month. No song can be listened to more than 5 times.

$5/month (Unlimited): the basic paid plan gives users unlimited, ad-free access to Spotify’s full library on the desktop.

$10/month (Premium): this plan includes full desktop access, as well as mobile access (which includes offline caching on the mobile device) and access to higher quality audio streams at 320 kbps (all songs are encoded in the Ogg Vorbis format). One important perk of this plan is also that you can use the service abroad for more than 14 days. In Europe, Spotify also often allows its premium users to get early access to some albums before they become available to other users.

According to TechCrunch’s Jason Kincaid, Earbits plans to charge bands for “s to pay for airtime and to display additional relevant information alongside their songs — like banners promoting an upcoming concert, complete with links to purchase tickets.” The company has put a few safeguards in place to ensure that it won’t be overrun by crappy music and in a comment thread on Hacker News, the company likens its system more the Google’s Adwords than the payola schemes that once were ubiquitous on Top 40 radio.

From a user perspective, Earbits’ free service is actually a lot of fun and the current selection of bands is quite interesting and refreshing. The design puts a large photo of the artist or band at the center of the experience, with a bio underneath. Earbits plans to add more band info and links to ticket sales and merchandise as well.

You can use the site without having to sign up for it, but if you do (using Facebook Connect), the service will keep track of what you are listening to and will recommend songs to you based on your musical tastes. Signing in also makes it easier to share songs with your friends on Facebook and Twitter.

Whether Earbits can succeed, though, will mostly depend on how musicians will react to the site once its payment system goes online. The developers argue that bands will only have to pay about $0.01 per play (if users skip before the 30-second mark, bands don’t have to pay, by the way), so for $15, they can reach 1,500 listeners. As one of the company’s representatives argued on Hacker News, “if you can’t sell one $15 concert ticket with the links to the box office right there, God help us all!”

No matter the business model, though, Earbits is a fun site for finding new music and worth a try.

As we noted last week, the U.S. record labels don’t feel comfortable with Spotify’s freemium model. In Europe, Spotify’s users can choose between an advertising-supported free service and a premium, ad-free version that allows access to mobile ads, 320kbps streaming, an offline mode, and access to your music even while you are abroad.

But Would Spotify Launch in the U.S. With Just Sony on Board?

For now, I remain skeptical. Even if Sony really signs a deal with the company, Spotify probably won’t launch with just the music from one label. With just one label on board, Spotify couldn’t compete with other services like Rdio and MOG and the user experience would be quite horrible as you would constantly end up looking for songs that simply aren’t available on the service. On the other hand, once Sony signs with Spotify, others will surely follow – but that could take a few more months…

The record labels are apparently scared off by Spotify’s freemium model and don’t want potential record buyers to think that music should always be free. Indeed, the industry has worked hard over the last few years (in between suing those who downloaded illegal MP3s) to wean people off the idea that all music should be available for free.

Officially, of course, Spotify still argues that its working hard to launch in the U.S. and looking for additional funding to finance this venture, but if the Telegraph’s source is right, then there is considerable doubt whether this launch will ever happen or whether Spotify will just remain an European company and cede the U.S. market to the likes of Rdio (itself founded by Europeans), MOG and similar startups.

(via: The Next Web)