A few months ago, we discussed how mobile music is evolving from ring tones to new music services. However, it’s not easy to find the right model to generate revenue in this market.
In September, the iPhone app Spotify was launched to the Apple app store, allowing users to access music playlists on their phone as part of the £9.99 ad-free monthly subscription. However, the reactions were very mixed. From the 1800 consumer reviews on the first day of the launch, there were 400 people giving the maximum of 5 stars, but no less than 1100 giving it only one star.
According to a survey among readers of the British website nma.co.uk, 2 out of 3 is not willing to pay for streaming music.
Mark Mulligan, VP and research director at Forrester Research, said the mobile music market is a tough challenge and no one has yet cracked it. “Consumers have generally said they have no appetite for paying for streaming music and there’s endless evidence that they won’t buy music they don’t own. So realistically, for Spotify, the aspiration should be to convert a small number of people to premium via the mobile app,” he said.
But a Spotify spokesman told NewMediaAge the company wasn’t surprised by consumers’ responses to the app. “We always knew the majority of users would stay on the free service,” he said. “We’re getting a lot of traffic from people used to free illegal downloads, so they expect us to be free. We’ve only launched on the iPhone and Android for now, so that’s just a small percentage of the market, although we’re confident a fair number will upgrade.”
Meanwhile, Napster, the illegal-gone-legal music service has reacted to the Spotify launch by halving the price of its streaming service to £5 a month.
Who will win this competition? Or will consumers stick to their illegal downloads, still found everywhere online…?