14 DAY TRIAL // Spotify has been getting a lot of hype lately and it's starting to look like it may be well deserved. The music streaming service has been very popular in the European countries where it has been launched so far and, according to a Universal Music exec in Sweden, the service's country of origin, the site is bringing some music labels more money in the country than iTunes.
“In five months from the launch Spotify became our largest digital source of income and so passed by iTunes,” Per Sundin, head of Universal in Sweden, told SwedishWire. “It’s a fantastic development explained by the fact that Spotify really has exploded”.
“iTunes is going really well, but Spotify is growing rapidly. There are signs that a large number of illegal downloaders are turning to Spotify,” Mark Dennis, head of digital sales at Sony in the country, said.
The rapid rise in popularity in Sweden and the fact that it's more used than iTunes are closely related to the specific environment in the country. A recent tougher law in Sweden concerning online piracy has made many of those downloading tracks illegally from file sharing sites turn to legal alternatives with digital sales growing 57 percent in the first half of this year. Because the two sites started from a relatively equal position, it was much easier for Spotify to gain new users in the detriment of iTunes.
But even outside of Sweden's particular case, the site is seeing big growth and, in the UK, the country with the biggest number of Spotify users, some in the music industry there are predicting it will become a major revenue stream for the labels within six months.
This all bodes well for the music labels but it's unclear how much the site itself is getting out of this. Spotify makes most of its revenue from ads and, with a falling ad market and music labels known for their crippling licensing prices, the company may be way off making any profits. One hope is that, because all big four music labels as well as the independent ones have a stake in the company, they wouldn't suck it dry like a number of other music streaming services. But the site still faces its biggest challenge yet as it tries to take over the US market like it did in Europe, no easy task even for a service so popular.