Slacker is branching out from its Internet radio roots. At CES in Las Vegas, Slacker unveiled details of its upcoming on-demand subscription service to VentureBeat. No specific date for the launch was given, but VentureBeat reports it will happen in a "couple weeks."
In addition, Slacker debuted its mobile apps for Nokia smartphones. The apps will be available at Nokia's Ovi store as well as Slacker.com.
The arrival of the on-demand service means Slacker has found a twist to the freemium business model that has vexed Spotify. Slacker's approach was to build on its non-interactive Internet radio product. It's like Pandora but with a few extra bells and whistles and a different user interface. Slacker actually has three levels of service. Its middle tier is an ad-free, non-interactive Internet radio service that costs $4.99 per month ($3.99 per month when billed annually).
In contrast, the typical approach to the freemium model is a product that offers both ad-supported, on-demand access in addition to paid on-demand access. This is what Spotify has done. Its non-paying users get advertisements while it's paying customers get special treatment -- early access to some content and, most importantly, mobile access. The product itself, however, is the same for both free and paying customers.
But while Slacker is preparing to bring its freemium model to market, Spotify has yet to gain approval from U.S. content owners for its freemium. Thus, it would appear that Slacker's approach is less threatening to U.S. labels than that of Spotify.
All things being equal, Slacker's three-pronged approach is probably more financially feasible than Spotify's two-pronged approach. Whereas Spotify is on the hook for on-demand royalties regardless of the level of service, Slacker's non-paying listeners generate far lower non-interactive royalties. That makes digital loitering far less expensive to Slacker. In Spotify's model, users who don't pay anything can still create considerable liabilities to content owners.
Of course, all things may not be equal. Factors such as business model and royalty structure are not terribly important to consumers. Slacker's on-demand service must be good enough able to compete in an increasingly crowded music access market. Create a must-have product and consumers will find it.