Spotify's long-awaited launch in the US, the world’s largest music market, has taken place today. The price points appear to be pretty much what had been anticipated - $4.99 for a desktop-only subscription, and $9.99 for the premium(desktop + mobile) variant. Also the free, ad-supported version - which gotSpotify's PR ball rolling so impressively here in Europe - will be available, on invitation and with a monthly allowance of 20 hours of music. The free stuff can be listened only via the desktop client, so Spotify's arrival will probably mean that Pandora hasto shift its attention further onto the mobile environment, which is where its real edge lies.
One common misconception aboutthefreemiummodel is that the ad-funded version is meant to be a significant source of revenue. Rather, it's more of one approach to offeringa free trialof the paid-for service - which is something that every subscription provider essentially has to do. Withouta trial the threshold to subscribe would be prohibitively high for most consumers.Spotify's approach is surelymore expensive than that taken by its peers (offer a teaser period of a couple of weeks, or up to a month), but on the other hand it gives the users time to play around with the service's features. At least in theory, that may then result in higher conversion rates. Two weeks or so of free listening is a fairly narrow window to make it a habit.
You could expect the freemium element to attract quite a bit of press and viralbuzzin the coming months. That'sgoing to somewhat redefine the general talk about the cloud music as well, as more people realize that lockers aren’tthe only game in town, even if that is what the big guys are currently offering. For commentary on the iCloud and other lockers,check myearlier blog post.If you haven’t already done so, you can also take a glimpse of our cloud music report.