Spotify Slashes Subscription Costs as MOG Prepares to Launch Outside U.S.

Daniel Ek and Martin Lorentzon

Spotify, purveyors of music streaming to discerning Europeans, has just slashed its subscription prices by 50%. It's introducing a couple of new tariffs: Spotify Unlimited, at half the cost of Spotify Premium, giving users ad-free music from their desktops, and Spotify Open, a free, ad-supported service. So, is the Swedish company gearing up for its Q3 launch in the U.S., or has it realized that a big shark (goes by the name of iTunes, currently digesting a fish called Lala) is circling the waters around it and is having second thoughts about dipping its toe into the U.S. market?

The first thing to take from this news is that the current streaming sites are all settling down with pretty similar prices: Anyone wanting an ad-free streaming service will be shelling out around £5 a month (that's $7). The mobile versions will cost ya, but the apps are, understandably, gratis. Although over 90% of Spotify's users have plumped for the free version, the firm would have a problem with bandwidth if no one paid for the service—hence the price cut.

Another factor is probably the fact that, having raised the funds, MOG is revving up for a U.K. launch, which may just put a stick in the spokes of Spotify, without doubt the highest-profile brand of the streamers. It's already doing well Stateside, and its CEO, David Hyman, has already said that MOG's price range will be loads cheaper than Spotify Premium.

The game-changer in all of this, however, is iTunes, and whatever form its inevitable cloud-based streaming service takes. We still know nothing, of course. But Lala will be dead in approximately two weeks, which must mean that Apple's iTunes iteration cannot be far behind. It will most likely come with a heftier price tag—Apple takes great care in marketing its wares as premium products, with a price to match—but there's no arguing with such a behemoth of a brand that has its deals with the record labels already in place.

I'm not suggesting that Spotify has turned chicken and is having second thoughts about launching on the other side of the Atlantic. There's a big market out there, and Spotify would be crazy to turn its back on the rich pickings of American music fans. But it must be wondering just how to go about it.

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