Business Matters: A $3 Billion Valuation Brings Spotify Expectations Back to Earth
Business Matters: A $3 Billion Valuation Brings Spotify Expectations Back to Earth

Spotify is getting out of the digital-download business in Europe. The subscription service's latest update does not allow users to buy downloads, although download credits already purchased -- including gift cards -- are still redeemable. U.S. users won't notice a change because in-app download purchases have never been a part of the service in that country.

A company spokesperson explains the move was made "to further streamline the service and pave the way" for upcoming discovery features that were announced last month and expected early this year. The spokesperson added that in-app purchases could return in future updates.

Download sales in general aren't exactly faltering. Track sales rose 6% and digital albums rose 14.8% in the U.K. in 2012, according to the BPI. Digital download revenues were up 32% in Germany in the first half of 2012, according to the BVMI. But the decision makes sense: Spotify is first and foremost a streaming service.

The upcoming features will aim to provide greater context and make music discovery easier. Users will be able to follow artists as they would on social networks. Spotify also plans to integrate album reviews, concert information from Songkick and playlists from tastemakers and celebrities. "We want to make discovery even more seamless and intuitive," CEO Daniel Ek said at the December 6th press event.

Even though Spotify no longer sells downloads, the product acknowledges that its users live in a world of both streams and downloads: The application allows users to access songs from the user's hard drive and also stream songs from Spotify's catalog.