Business Matters: Flaws in the Argument That Spotify Will 'Never' Be Profitable
Business Matters: Flaws in the Argument That Spotify Will 'Never' Be Profitable

Spotify Reportedly Launching in Mid-July -- Will Music Fans Care?
-- The latest Spotify rumor of the week says the service will launch in the U.S. between July 5 and July 15 and will cost $10 per month. This is according to a post by The Noisecast, which claims to have spoken with a source who claims to have received the details in an e-mail correspondence with a major label executive.

The e-mails are also said to suggest the launch would be invitation only, which is a pretty typical way of launching a music service these days. The $10 per month fee is also very typical for an unlimited music subscription with mobile access. Spotify's peers - Rhapsody, Rdio, MOG et al - also charge this price for the same level of service. In Europe, Spotify offers a less expensive, web-only level of service as well as a free, ad-supported service. There has been no indication that U.S. consumers will get a free, ad-supported service.

As has already mentioned, the July 5 date was given as the earliest possible launch date by Jonathan Forester, General Manager of Europe & Global Vice President of Ad Sales, at a conference in London earlier this month.

One wonders if Spotify would have been better off launching a year or two ago. The potential market for the service is arguably better now that more people have mobile devices that can run Spotify's app. And with the cloud music forays of Apple, Amazon and Google, consumers are now better educated about the array of competing services.

But in terms of buzz, Spotify has pretty much reached a plateau in U.S. over the last 12 months, according to Google Trends' results for the search term "Spotify" in the U.S. In fact, U.S. search volume for "spotify" peaked in 2009 with the launch of the company's iPhone and Android apps.

The company should be worried that Apple has stolen some of its thunder - even though iCloud and the iTunes Match service isn't expected to launch later this year. In early June, when Apple debuted the details of the iCloud and iTunes Match services, U.S. search volume for Apple's iCloud was about 30 times higher than Spotify's search volume. The marketing power of Steve Jobs combined with Apple's large, loyal base of consumers equals a formidable opponent for even the most buzzworthy music startup. ( The Noisecast)

Shazam CEO on the Company's Move Into TV
-- The day after Shazam announced a $32 million round of funding, CEO Andrew Fisher talked to TechCrunch TV about its push into television advertising and the difference between mobile operating systems.

Fisher said Shazam has 40 million users on the iPhone and 30 million users on Android (it's approaching 150 million total users). "In percentage growth terms, Android has been the fastest growing platform over the last 12 months for us as a company," he said. And while iPhone and Android are very prevalent in North America and Western Europe, Shazam is on mid-tier devices with lower penetration rates in other parts of the world.

One interesting comment was about transactions on the Shazam platform. The company sees "consistent" user behavior on smartphones in general, but iPhone users separate themselves when it comes to actually purchasing through Shazam. "There's no two ways about it," said Fisher. "iTunes is the dominant platform right now in terms of people's propensity to purchase through that platform." He added the differences between operating systems will grow smaller as companies such as Nokia enable single-click purchase. "Ultimately, when we get to just pressing a button to buy a piece of content, then we think these platforms will level themselves out." ( TechCrunch)

The Dish on Groupon Customers …
-- Does Groupon attract new customers, cannibalize existing business or both? A survey by Foresee has found that 31% of daily deal buyers are new customers. The remaining daily deals buyers are either frequent customers (38%), infrequent customers (27%) and former customers (4%).

Whether or not a business experiences a net loss from the daily deal depends on the price of the daily deal (the business typically keeps half the revenue) and the cost of goods sold. But this survey implies that 31% of daily deal customers are wayward customers that needed some sort of incentive to return. If a company had this person's e-mail address or was friend's on Facebook or Twitter, better communication could have prompted a return visit. A daily deal seems like an expensive way to get back in touch with customers a business should not have let stray in the first place. ( FREEDyourMind blog)