Peter Kafka

Recent Posts by Peter Kafka

Yes, Spotify Is Headed to the Web. No, Spotify Isn’t Cutting Its Prices.

Waiting to use Spotify on the Web? Hang on a few weeks.

Waiting to pay $8 a month for Spotify’s premium service? Don’t hold your breath.

Yes, as TechCrunch reported yesterday, the streaming music company is getting ready to roll out a version of its service that will work on a Web browser, instead of requiring special software.

But it’s not, as TechCrunch suggested yesterday, preparing to cut the rate for its mobile, ad-free service by 20 percent.

The price cut would have been a biggish deal for Spotify, because it would have suggested that the company had concluded that its current model was broken. But it’s not happening now or anytime in the forseeable future, say people who understand Spotify’s thinking.

A couple things to bear in mind:

  • Spotify, like its streaming service competitors, hands the music labels and copyright owners about $7 a month for each paid subscriber it signs up. Cutting its monthly fee from $10 a month to $8 would blow up its margins.
  • Spotify is open to monkeying around with its pricing and lots of other features. For instance, it’s currently testing a version of the service that doesn’t require new users to sign up via Facebook. And in the long run, it would probably like to cut its prices if it could figure out how to make the economics work. But Spotify has already tested out a price cut, in Spain, and found it had little effect on take-up rates. So for now, if you want to hear Spotify without ads, or if you want to hear it on an iPhone or Android machine, it’s going to be $10.

As far as the browser goes: Some users should start seeing the option pop up in the next month or so. In practical terms, that means new and current users will find it easier to play songs immediately, because they won’t have to download or boot up secial software. That’s particularly useful when people encounter Spotify links via social media, or “play buttons” the company has been pushing out to Yahoo and many other sites.

But Spotify still expects most users to use its software most of the time, and will encourage new users to download the client.

The browser-based version will be missing some capabilites that Spotify thinks are crucial, like the ability to play cached music without an Internet connection, as well as the apps the company made a big fuss about last year.

The main idea here: Spotify has 15 million users, and 4 million of them are paying subscribers. It would like to increase both numbers, and thinks a Web-based version of the software will help do it.

But it’s also not counting on the browser to do a whole lot for them. Expect to see a big marketing push from the company — including evidence of the big Coke partnership it touted earlier this year — in the coming months.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google