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Spotify: A new bounty of free music

This European app streams free music and makes money for musicians.

By Stephen HumphriesCorrespondent for The Christian Science Monitor / August 19, 2009

Rob Dunlavey

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Los Angeles

A Stockholm company has developed a music application that – if you believe the hype – may wipe out music piracy, make Apple’s iTunes largely irrelevant, and even supplant ABBA as Sweden’s most significant pop culture export. It’s called Spotify.

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The downloadable gizmo is a virtual jukebox that allows users to listen to almost any song in the world without paying a dime. Legally, too.

With its gray interface, Spotify almost resembles iTunes. But all the music is streamed instead of downloaded – so, the songs are computer-bound and will not transfer to an iPod. As long as listeners are within speaker’s-reach of their PC, the only speed bump is a 20-second ad every 30 minutes. (Alternatively, users can also purchase a premium, commercial-free service.)

Sound too good to be true? Well, for US residents, it is.

Spotify is currently only available in Europe. Negotiations are under way with music labels for a US release. But if Spotify does colonize North AmericaCEO Daniel Ek tells the Monitor that “it’s coming” – the service may further encourage listeners to view music as an essentially free commodity.

“That’s the culture we live in: Everybody has instant access to so much media, and they expect it to be free,” says Glenn Peoples, senior editorial analyst at Billboard magazine. “It’s important that services innovate and challenge themselves to come up with new and better ways to offer music and pay content holders. If [Spotify] succeeds, then they prove that you can have free music and you can serve all stakeholders.”

The inspiration for Spotify came from another Swedish outfit: The Pirate Bay, whose online buccaneers were recently found guilty of copyright infringement in a Stockholm court. Mr. Ek wanted to somehow legally harness the massive demand for free, immediately accessible material.

His solution: An application that partly streams music from a central server and partly utilizes peer-to-peer (P2P) technology. Essentially, Spotify uses a small portion of user’s computer bandwidth, turning each machine into a part-time server. Spotify also added its own tweak to P2P technology. Whereas traditional P2P only assembles a song after it has downloaded all the constituent bits in random order, Spotify streams each part of a track in sequence to facilitate hiccup-free listening.

Devising the technology was the easy part. After founding Spotify in 2006, Ek spent two years visiting record companies across the world, meeting everyone from janitors to CEOs” in an effort to convince them that the only way to beat piracy is to offer a better product.

These days, record-company executives face the same predicament as a slide-rule manufacturer in the pocket-calculator age. Until recently, the record-label business model relied on the sale of physical products. But even the industry’s late entry into the digital-music market hasn’t compensated for online piracy and the decline of CD sales.

Album sales – whether CD, vinyl, or digital – dropped 14 percent in 2008 and have almost fallen by half since 2000, according to Nielsen retail figures.

“Right now, 95 percent of all downloads are illegal,” says Ek in an e-mail interview, citing a January report from the music trade group, the International Federation of the Phonographic Industry. “We’re looking to take this 95 percent of music fans and bring them into a user-friendly, legal environment where they can get exactly what they want while also contributing money to the artists by either listening to ads, subscribing to the service, purchasing downloads, or, in the near future, buying gig tickets and merchandising on Spotify.”