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I love Lala's business model. I pay ten cents for each song for an unlimited stream of that song, so for one dollar I can add ten songs to my music library. Also, when I pay ten cents for a web song, that amount is automatically deducted from the price of downloading a free-drm version of the song.
I also love Lala's social features. Facebook connect is fully supported and I can push songs that I purchase to Facebook and/or Twitter for other people to listen to. Facebook is especially useful because a music player is included.
I also know that Lala has on iPhone application in the works that was demoed on Techcrunch a while back.
The only thing I like about Spotify more than Lala is, as you stated, the very vast library of music. Also, I can see where the ten dollars a month could be a real steal for people who listen to TONS of music. I find Lala to be more reasonable for my demand.
- lala lets you share music with anyone. People in the U.S. can hear the entire song, people outside the U.S. can hear at least a 30 second snippet... WITHOUT downloading anything. lala has nice short URLs that just work.
- Napster offers a totally ad-free offering, both web-based and app-based, for just $5 a month which includes 5 MP3s (making the subscription basically free). For anyone that buys ~5 songs a month on iTunes OR for whom $5 is not that much moolah, why would they pick Spotify over Napster? (Napster offers free listening, too, btw, albeit very hidden and under an admittedly clunky interface: http://free.napster.com).
Personally, my take on why Spotify has gotten such buzz is because it's the first legal listen-on-demand service that's free. But I have my doubts that free-on-demand is sustainable given the greedy labels, and with lala offering limited-on-demand for free and Napster offering full on-demand for close-to-free, I don't see what niche Spotify will fill successfully here.
Although Spotify has several million users across Europe now, many music fans still don't "get it" (literally and conceptually). The shift from owning a CD to owning an mp3 instead is still happening, so the new shift from owning music to streaming music is more than many can take. There's also a view that because it's "free" the artists do not get paid. This is not the case since every time a track is streamed the artist's label will receive a cent or two.
Here in the UK we've been a bit starved on music services compared with the US, even though Britain is the #2 exporter of music in the world. Sure some of the buzz around Spotify must be because there's not a lot to compete with it here, but I think most of it justified: Spotify is simply a fantastic service for music fans.
Spotify CEO Daniel Ek held an impromptu Q&A on Twitter yesterday, prompted (it seems) by his belief that the term sheet stories you mention were not entirely accurate. When asked what was Spotify's biggest risk, he replied: "Generating enough revenues for artists to see us as a viable platform. Always hard to get right with a 'free' product."
I've been a fan of music for over 20 years and Spotify has changed my life. So much so in fact that I've been writing a blog about it all year called The Pansentient League ( http://pansentient.com ). There are hundreds of sites and services that have sprung up already to support/leech Spotify and I maintain a list of them all there.
Jer aka Afront
http://pansentient.com
My favorite last.fm station is based on the Sounds From the Ground (a band I happened upon while listening to Grooveshark to a match of Orbital Transient).
In case you're curious, here are my loved tracks so far: http://www.last.fm/user/victusfate/library/loved
I've completely envious, as well as curious about whether Spotify is meeting the needs of online music consumers in a way that the music labels should have done years ago. Of course, the fact the labels are investors in Spotify suggests this may, in fact, be the case. :)
i am using Spotify also. I really like their features too. Spotify are now using by more people
because of the good feedback and reviews of the tool.