Cloud Wars Episode II – The Swedes Strike Back

Back in April I correctly predicted that Spotify would soon offer their mobile service to all customers, including free accounts, following their restrictions placed on non paying users; this is a huge step for them in the ongoing battle to get a full cloud service out there. To be clear, this update does not allow non-paying users to stream music that they do not own – only the tracks they have synced from their personal computer to their device. The desktop version of Spotify has been able to sync a users owned music over WiFi to a the mobile device for some time, a smart move on Spotify’s part to save streaming bandwidth costs. This new update now includes iPod syncing, something that has required the owners to always be tied to iTunes. Today’s announcement is really significant in terms of getting users into the Spotify ecosystem and in my opinion really puts Lorentzon & Ek’s company out there as the leaders in the cloud race.

Apple, Amazon and Spotify already account for 90% of  worldwide digital music revenues for and I think this move could prove to be a significant shift in Spotify’s publicised revenue problems if they can get customers to move away from Apple. This is all the more likely given their pending US launch and the hype around the lack of launch for the last yeat. Having worked on the original purchasing implementation, which was powered by 7digital, it was actually quite interesting to see how many purchases were made through it when users could still listen for free – it really points to users’ preference to own their music over the “rental” streaming model.

I think the most interesting outcome from all of this will be the backlash reaction from Apple. In the past, Apple have changed the way that music is stored on iPods during software updates to prevent third-party software from being able to move music onto the device. It wouldn’t take much for Apple to do this and I wouldn’t be surprised if the next software updates will cause problems for the engineers  over in Gothenberg & Stockholm.

The other question surrounds the iOS app and whether Apple will allow future updates to it or if they will even just remove it from the app store entirely. At 7digital we’ve struggled to get our iOS app through the submission process; an app that does considerably less to compete with iTunes and the iPod compared to that from Spotify. Unless Spotify has an agreement with Apple – which I find highly unlikely, I wouldn’t be surprised if the app store guidelines change to say if your app name contains the word ‘Spot’  and your logo is green then it can’t exist in the app store.

On top of this there is the well documented case of Apple wanting 30% of any app subscriptions which would effectively ruin Spotify’s model as they will not be able to operate on these terms. I guess the ball is now in Apple’s court.