With Spotify launching a new offline music player for iPhones, it has taken a big step forward to giving itself a future. Now it faces the same dilemma as Real's Rhapsody: why pay for a universal jukebox when your music will disappear when the sub runs out?
This particular universal jukebox is growing at a fantastic rate, but it's also losing money at a fantastic rate, and has no serious income - as we revealed earlier this summer. On the back of just half a million UK subscribers, Spotify was pulling in a sorry 14p per user. Only 17,000 UK users were paying a tenner a month. With songs costing at a penny per play, you can do the maths yourself.
If you're on Spotify and have played much over a dozen songs, you're costing them money. Now at last there's an incentive to pay a tenner a month - which, for Spotify, covers about a thousand plays. Most subscribers don't get anywhere near a thousand, so it can begin to cover the cost of listeners who don't pay a penny.
iPhone and iPod Touch users are in the affluent set - with the most disposable income. if Spotify can't convert this lot to paying for music, then who can?
But as with Rhapsody, it's a copy controlled system. You can take your music to a portable player, but it must be one approved by Spotify. Your music may not stray out into the wild as an MP3.
Spotify's storage is actually one of it's best-kept secrets - and like the best it's hidden in plain view. This has perplexed some "expert" technology sites.
"There must be some kind of data download that brings in tracks which don’t appear as MP3s or as discernible tracks outside the app itself," puzzled a TechCrunch editor recently. "Could the files end up being hacked out of the application?".
The word the author was groping for was "cache" - and Spotify's encrypted cache is one of the most interesting things about it. Like the Magic Porridge Pot, the Spotify cache just keeps growing and growing - although the company does kindly offer to cap it for you at 80GB.
Spotify downloads the songs over the network using OGG format, but this is by the by. For months it's been building a parallel music collection for you, alongside your iTunes or WMP library or your plain ol' MP3 collection.
If you don't believe me, have a look for yourself. As a Mac user, peek inside
~/Library/com.spotify.client/ and there are your OGGs, obfuscated. But the TechCrunch question was a decent one to ask - what's surprising is that the usual suspects aren't raging about the injustice of it all, or that some hacker hasn't set about the task of cracking the Spotify chain just yet.
It's not as if the anti-copyright crowd are shy of using any reason (real or imagined) to feel victimized by the music business - they thrive on it.
So does this mean people love DRM all of a sudden? Or begun to tolerate it? Or stopped caring?
I'm not so sure. Most Rhapsody users I've met are extremely happy, regarding it as a jukebox with caching. Spotify users will doubtless feel the same. But a recent poll showed that the desire for no-strings-attached "ownership" of sound recordings was far higher than anyone expected. Seventy seven per cent of young music fans wanted to have an original recording in a physical format even if they were subscribed to an all-you-can-eat music service. They cited various interesting reasons.
That means there's still untapped demand from us that licensed music services aren't fulfilling. News from Real's Rhapsody, which has also submitted an iPhone application, should remind us of that. The company has around 100 employees on 750,000 paying subscribers, but laid some off earlier this month after numbers fell slightly. ®