RAIN 6/19: Spotify penetrates web radio market with new mobile offering

Michael Schmitt
June 19, 2012 - 11:00am

Spotify Radio on iPhones

A coming update to Spotify's iPhone and iPad apps will include customizable streaming radio, available even to free users (previously Spotify's mobile app was completely off-limits to free users). Observers say the move makes Spotify "more directly competitive with online radio leader Pandora," as Billboard writes.

The new streaming radio service -- now "the central feature of the mobile app," according to Spotify product manager Donovan Sung -- lets users create stations from songs, playlists, albums, artists or their friends' musical tastes. Users can save tracks for on-demand listening later and customize the stream with thumbs-up and thumbs-down buttons.

Spotify quoteInterestingly -- reportedly unlike Spotify's earlier radio product (more here) -- the new radio streams are "DMCA compliant," reports All Things Digital, meaning "Spotify doesn't need permission from music owners in order to roll it out. It also means the streams are "cheaper to operate" for Spotify, writes Bloomberg, "because royalty rates are lower" than direct deals. The streams also include advertising (like Spotify's free desktop offering).

The iOS update will arrive "in the next few days," Spotify told Engadget. An Android version may be coming later this year.

"We feel like the radio experience of just hitting play, leaning back and not controlling exactly what plays is core to a great music experience,” Charlie Hellman, Spotify VP of product, told Bloomberg.

We first caught wind of Spotify's plans to create a Pandora-like Internet radio service in April (RAIN coverage here).  On-demand competitor Rdio is also reportedly working on a Pandora-like web radio offering (RAIN coverage here).

Peter Kafka argues in All Things Digital that this is bad news for Pandora. "A lot of people confuse Spotify’s streaming music service with Pandora’s streaming music service. Now they’re going to be a lot more confused." That's "a problem for Pandora."

He continues, "Spotify now has a chance to expose many more people to its product, in the hopes of eventually converting some of them to paid subscribers. And Pandora, which has consistently argued that it hasn’t seen any impact from Spotify’s U.S. launch last summer, may no longer be able to say that."

You can find more coverage from All Things Digital here, Bloomberg here, Engadget here, The Verge here, Boy Genius Report here and Billboard here.

Michael Schmitt
June 19, 2012 - 11:30am

New Music SeminarThe development of Internet radio monetization was a key focus among industry executives speaking at the New Music Seminar in New York.

"The monetization of online music is not quite there, but it’s coming," said Clear Channel CEO Bob Pittman. TargetSpot CEO Eyal Goldwerger agreed, explaining that there's "a migration to Internet radio... it takes time for the marketplace to form."

Pandora Senior Vice President of Advertising Sales Steven Kritzman said, "Revenue is just starting to follow the model, and it will continue in an aggressive way, as the platform grows and evolves." RAIN publisher and AccuRadio founder/CEO Kurt Hanson recommended that "Internet radio must learn the lessons from the past," in particular keeping spotloads low.

You can find more coverage from Radio-Info here.

Michael Schmitt
June 19, 2012 - 11:30am

Songza for iPhoneWeb music service Songza has reportedly become the most popular free music app for Apple mobile devices, bumping Pandora out of the top spot. It has seen 1.15 million downloads since June 7, when Songza updated its iPhone app and released a new app for iPads.

"It looks like Internet radio service Songza is this summer's next big thing in digital music," comments Billboard. GigaOM calls the service "mobile's newest star." TechCrunch writes, "This is a testament to how startups can disrupt crowded spaces as long as the core idea is solving the problem differently."

New York-based Songza "aims to help people find the perfect playlist for what they're doing at the moment - whether it's unwinding after a hectic week, reading the morning newspaper or hosting a cocktail party," writes Reuters.

"We're trying to make the world's greatest collection of amazing playlists and long-form listening experiences", said Elias Roman, co-founder of Songza. "The idea is [to] get people to just three playlists really quickly that they're going to love and are going to be perfect for whatever situation they're in and whatever type of music they love," explained co-founder Peter Asbill. 

You can find more coverage about what exact Songza is in RAIN here.

"People seem to enjoy Songza because it's different than other Internet radio services. It offers playlists based on moods and interests, not artists and albums," writes Billboard.

Plus, as the AP reports, Songza does not run audio ads. That adds extra pressure in the "struggle to survive in a business saddled with high royalty rates for artists." 

Billboard also offers a dose of reality: "Let's keep Songza in perspective, shall we? iHeartRadio reached 10 million users in ten months. TuneIn claims to have 30 million users. Pandora has over 53 million active users. And history has taught us that next big things don't always work out."

You can find more coverage from the AP here, Reuters here, GigaOM here, Billboard here and TechCrunch here.

Paul Maloney
June 19, 2012 - 11:30am

SurfaceResearch from the Online Publishers Association shows 75 million U.S. Internet users -- 31% -- now own a tablet device. That's up from 12% last year, and is expected to hit 47% (117 million in the U.S.) in 2013.

This news comes as Microsoft yesterday unveiled the Surface, a Windows 8 PC tablet with a cover that flips down to become a full keyboard. Initial 32- and 64-gigabyte "Windows RT" OS versions should be available in fall. The full Windows 8 version will be available three months later in 64- and 128-GB versions. Microsoft says they'll likely be priced "in the same zone as ultrabooks, which typically run around $1,000," reports CNN.

DigitalTrends.com reports that the Online Publishers study has consumers evenly split between Android and iOS tablets (just a year ago the tablet sector was dominated by Apple's iPad). Adoption of the BlackBerry Playbook, meanwhile, drops year-over-year. Watching Internet video continues to be the most popular tablet activity.

Read more on the tablet study in DigitalTrends here. Read more on the Microsoft Surface from CNN here.