Well, it’s been a few days since Spotify landed in the US.

Let me check…is Pandora still there?  Yep.  Whew!

What about iTunes?  Hmm.  That’s weird.  The US music world at large seems unscathed.

While Spotify probably got an unprecedented amount of initial signups thanks to their ongoing, pre-launch PR dream/nightmare, the real question is, are they different enough, more savvy at marketing, or just plain luckier than all of the on-demand music services that America already has to offer?

Are they going to live up to the hype?

Spotify vs. the US Competition

Chris Chen, a good friend and founder of social music startup Like.fm, posted a great comparison of Spotify to its on-demand, US counterparts.  The detailed analysis ranks it against Rdio, Rhapsody, Grooveshark, MOG and several other important services in categories like Catalog, Discovery, Mobile, Social and the UI/Player.

Chris was nice enough to loan us his Summary Chart for this post (so be sure to go join Like.fm, it’s free!):

It appears at first glance that Spotify certainly has its bases covered in terms of the service itself.  9 out of 10 is a pretty good score for any product, especially when you have to please music lovers of all kinds.  I asked Chris why he gave them a 9 out of 10, even though their average is much lower, thanks to low marks in Social and Music Discovery.  Chris explained that the most important aspects of on-demand services are their Mobile capabilities and their Music Player, so he weighted these categories, in which Spotify performs particularly strong.

Is 9 out of 10 Enough?

The question at hand is, is 9 out of 10 enough to do anything meaningful in the US market?  After all, Spotify is forecasting 50 million users in year one, thanks to a somewhat leaked partnership plan with Facebook.  That’s one in eight Americans and half of what it took Pandora 10 years to cultivate.  That’s pretty ballsy considering that a 9 out of 10 product hasn’t ensured success for any of the other companies that scored as high in Chris’s chart.  MOG and Grooveshark certainly aren’t trivial in the American music space, but they’re a long way from successful (especially if you factor in Grooveshark’s ongoing legal troubles) and light years from 50 million users, after years of a US presence and a head start in a fiercely competitive market.

Rdio and Rhapsody are only one point behind these three leaders and their services aren’t even close to being household names.

What are People Saying?

Rather than looking at everything analytically, let’s just go to the source.  What are Americans saying about the new service?

If you believe what you read on Mashable, the whole country is rosy with Spotify afterglow.  They posted a flurry of comments that made it seem like the whole world was madly in love, including countless celebrities.  I only found one bad comment in their lengthy list of reactions.

But I also hang out in darker corners of the internet.

The community at popular tech forum Hacker News responded to Chris’s comparison with a lot more diversified feedback:

“I signed up for Spotify and was pretty disappointed. I have years and years of Data in iTunes, and the only thing Spotify does is pull out tracks. It won’t even sync my SmartPlaylists. So it’s kind of like starting over. Not something I’m willing to do.”

“I have been a huge Rdio fan for awhile and after playing with Spotify I have come to the conclusion that Spotify is great if you don’t want to pay, if you want to pay then Rdio is much better because of the method in which it presents new music to you.”

“I was very unimpressed with Spotify when it launched in the US this week. The app (at least on a Mac) seemed very non-native and used a lot of resources when it was inactive… I saw some top music lists, but not much else. My iTunes Playlists sort of came over, but not the Smart Playlists which are the only ones I use. Didn’t see any recommendations.”

Some people refuted the naysayers – “I strongly encourage you to give it another try. Spotify is not iTunes or Pandora, it has very different strengths.”

One comment, though, pointed out something that seems to be a huge problem for a service that plans to compete with Rdio, Rhapsody and Grooveshark.  Spotify has no web-based client, and from the looks of it, no plans to offer one.

With a vast majority of Americans doing their primary listening (and music service sampling) at work, where a significant percentage are not allowed to download or install applications on their computers, it seems very difficult to change 50 million peoples’ listening habits without a browser-based app.  Most desktop music listening happens during these daytime work hours, and then it’s off to our commute and onto our mobile devices, where Spotify doesn’t have a free service to try out.  Once people get home, music listening takes a nose dive.

Is That All You Got?

So the question remains – what does Spotify think they have that American services haven’t already been offering for years?  According to leaked marketing documents, they’re banking an awful lot of their success on Facebook.  That’s great for getting in front of users (which is all they’ve said they’ll accomplish), but says nothing about whether they can convert them into paying customers.

But the funniest part of Spotify’s confidence might be that two of the 7 points on their marketing slide of world domination say the same thing (and one just says they’re going to hit 50M users).  Bullet #3 says that Americans get the Rolls Royce version right away, but then they say nothing about the actual product and talk only about buzz and back story.  The fact is, Europeans had a much larger free offering for years.  Americans, in fact, are getting only 6 months of that version and then it’s down to 10 free hours only.  The 6th point then mentions PR and buzz again.

There’s no doubt about it, the Spotify buzz has been nothing if it hasn’t been maddening and deafening, but Digital Music News pointed out just 9 days ago that more Americans are searching for the now defunct Limewire than they are for Spotify, by a landslide.  Now that they’re here, and now that they have all four major labels locked up, other than the Facebook partnership, what else is there to talk about?  Buzz is great but Pandora’s been on the tip of the US tongue for at least the past 4 years and is only now hitting 100 million users with, frankly, a more significant free offering.

Oh, and One More Thing – That Music, It’s Not Yours

I’ll end with one final problem that (I hope) Americans will realize they have with any of the subscription based, on-demand music services out there.

Earlier tonight, someone posted a question on the popular Q&A site Quora: What advantages do Google Music, iCloud (music) or Amazon’s cloud drive (music) have over Spotify?

But what was particularly alarming was the question description details, which read:

“If Spotify has a big enough music catalog, it seems like it quickly outpaces any of the other cloud services in value. The only area I can see buying music being worth it any more is if 1.) the song isn’t available on Spotify or 2.) you need mobile access and don’t want to pay $10 a month to Spotify or 3.) you need the other cloud features and music comes along for the ride.”  (Bolding added for emhpasis)

Here is what I hope Americans understand about Spotify or any service like it.  Every one of these services costs more than the average American spends every year purchasing music.  And yet, at the end of the year, you own none of the music you’ve been paying for.

There’s the rub.

The catch with Spotify and others is that it seems like you have a massive catalog of music.  In some cases, in fact, it almost devalues music by making it so accessible, and in such large quantities for so little money.  But over the course of time the average consumer will have spent more money on monthly subscriptions than they would have buying an adequate number of their own albums, with a good chance that they’ll experience the same crash that the music industry itself has.

With more than 5 strong services to pick from in the on-demand market, how will any out pace the others?  And if one is lucky enough to do so, surely the failing businesses are forced to shut their doors.  What of their customers?  I suppose they can switch to a competitor, re-load all of their playlists (if they’re lucky), and hope that their friends are using the same social aspects of the service.  Regardless, after paying $360 for three years of Spotify Premium, if the labels suddenly decide to pull their licenses, or any other number of things causes them to shut down, you’re left having spent more money than you would have over 3 years buying about 36 albums, and yet you don’t own those albums.  If you actually listen to thousands of songs, maybe that’s still a bargain for you, but me, I like to own my music, enjoy my art, support my artists, and not put the fate of my music collection (or at least my music budget) in the hands of an untested company.

In Conclusion

Frankly, there is no conclusion.  For Spotify, this should be only the beginning.  But, from user comments to industry reviews, it seems that the monster from across the pond had a great arrival, and managed to stack up just about the same as other subscription services.  Certainly a good start, being 9 out of 10, but is that really enough to live up to the hype?  Guess we’ll find out.

Joey Flores
CEO, earbits.com
[email protected]
Listen at www.earbits.com
Connect with us on Facebook: www.facebook.com/earbits
Listen on iPhone: itunes.apple.com/us/app/earbits-radio/id397894402
Twitter: @earbits

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