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For the music companies that have teamed up with Spotify to supply the content, it's a leap in the dark. But they are desperate. Sales of CDs plunged 20 percent last year in the United States, the world's largest market. Spotify has the potential to provide the music labels with a steady revenue stream from licensing deals—their returns are based on how often tracks are played—and free music on demand for the public. In an industry that fought online music tooth and nail for a decade, this is a big change. "In the past we had closed minds," says Jim Selby, of Naxos, the leading classical-music label. "To replace the sales we have lost, we have to be open to new ideas. We have to try different business models."

Perhaps the biggest advantage, from the record companies' point of view, is that the service provides a way around the piracy issue: since there are no downloads, there's nothing to steal. (About 95 percent of music downloads are illegal, according to industry estimates.) "We have no problems with Spotify at all," says Julian Hobbins of the British-based Federation Against Software Theft. "Why would anyone pirate content or steal if they can get it as they want it for free?"

The hope is that Spotify will even boost conventional sales. When U2 released its album "No Line on the Horizon," it appeared on Spotify a week before it reached stores in the hope of spurring interest.

The big question, of course, is whether the service will continue to grow at its current rate. That depends on whether listeners are willing to endure a few ads in return for their music, as they do with commercial radio and television. If not, subscription revenues alone may not be enough to satisfy the music companies. Continued success might tempt Apple into the market, stealing Spotify's thunder. If free music sounds like the future, it's far from clear who'll be calling the tunes.

© 2009

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Member Comments

  • Posted By: rpearlston @ 03/30/2009 3:15:28 PM

    You'd lose your bet on how "well" I'm doing. I'm on disability, which means a very, very small and fixed income. If I could buy music, I'd do so, but I shouldn't be punished for being disabled.

    I have never downloaded illegally, and I nevedr would, which is why I emphasized a LEGAL site. Such sites have a philosphy similar to that of web-based e-mail, in which the service is free and legal, because it's paid for by advertisers who have been courted by the service.

    I don't appreciate your insults, nor your presumptions about my intent. Next time, please comment on my actual words, and not the ones that you see fit to have put into my mouth.

  • Posted By: The Maddest Hatter @ 03/29/2009 5:01:39 PM

    "Give me a site that's free, and legal, with downloable music and available anywhere, please. And by free, I don't mean a trial offer and I don't mean a monthly subscription fee that then allows me unlimited download"

    "Not everyone has money to spend, on such services, nor plastic with which to pay such fees, particularly in these trying economic times, and "music hath charms to sooth the savage beast"

    so you expect the producers, engineers, assistant engineers, studio tech's, studio managers, a&r reps, studio managers etc. to work for free so you dont have to pay for music? well you know what, i happen to be an engineer at a commercial studio, and statements like yours really pi$$ me off.. i work long hard hours, not for the money (i make minimum wage) , but fgr the love of music. your right these are tough times right now, FOR EVERYONE.. i guarantee your doing alot better than me, you only have to deal with a bad economy. i have to deal with the economy, AND, people like you who STEAL my work by downloading illegally. ill give you free and legal music when you do your job for free.. until then, quit complaining that you want a better way to steal from me.

  • Posted By: The Maddest Hatter @ 03/29/2009 5:01:07 PM

    "Give me a site that's free, and legal, with downloable music and available anywhere, please. And by free, I don't mean a trial offer and I don't mean a monthly subscription fee that then allows me unlimited download"

    "Not everyone has money to spend, on such services, nor plastic with which to pay such fees, particularly in these trying economic times, and "music hath charms to sooth the savage beast"

    so you expect the producers, engineers, assistant engineers, studio tech's, studio managers, a&r reps, studio managers etc. to work for free so you dont have to pay for music? well you know what, i happen to be an engineer at a commercial studio, and statements like yours really pi$$ me off.. i work long hard hours, not for the money (i make minimum wage) , but fgr the love of music. your right these are tough times right now, FOR EVERYONE.. i guarantee your doing alot better than me, you only have to deal with a bad economy. i have to deal with the economy, AND, people like you who STEAL my work by downloading illegally. ill give you free and legal music when you do your job for free.. until then, quit complaining that you want a better way to steal from me.

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