Spotify weighs up business model with new iPhone app

Valerie | 29 Jul 2009, 10:00

As the Times reports, Spotify is, at the moment, “probably the hottest web start-up to come out of Europe since, well, forever”, with its all-you-can-eat free music service and two million users in the UK alone. 

It is all the more interesting then that the company has submitted its mobile application to Apple’s App Store meaning that an iPhone version could be launched within days. A compelling streaming music service on Apple’s device could cannibalise iTunes Store downloads and effectively render the business of buying individual songs obsolete. So, the Times asks, is Spotify a real threat or more like YouTube — a popular service in desperate search for a business model?

Speaking to PaidContent, Spotify CEO Daniel Ek confirmed the submission:

“We’ve a great relationship with Apple, think the iPhone is awesome and absolutely expect them to approve the app in the next few weeks. Apple has already approved several other music services such as Last.fm, Deezer and Pandora.”

Ernest Doku, from mobile phone comparison site Omio believes it could be a significant move for Spotify if the application is approved:

“The problem Spotify has faced so far is how to turn free users into premium subscribers.

“By providing music on the go, this would finally give Spotify subscribers an incentive to splash out for the service.”

The app will only be available to Spotify’s premium users – those who pay a £9.99 a month subscription fee to be able to listen to songs advert-free.

The Guardian notes that Apple might be more open to approving Spotify’s application because it is in talks with music companies and could be bringing out its own streaming music service.  With advertising supported businesses coming under pressure during the recession, providing such value-added services could help Spotify to survive and add more paying customers.

As CNET points out, with or without Apple’s approval of the Spotify mobile app, there are still some reassuring signs that the Spotify desktop client will hit the US before the year is out, a new unchartered market for Spotify, which could see another shake up in the online music landscape.