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Spotify Has Arrived Stateside: Here's What You Need To Know

The music streaming service Spotify, which was launched in Sweden in 2008 and has been eagerly awaited by tech-savvy music fans in the United States for the last year, has launched its U.S. version.

The service has won over users in Europe — and generated anticipation here — by offering a simple service: a huge catalog of music that can be streamed, combined into playlists and accessed from any computer with an Internet connection, all for free.

That four letter word — F-R-E-E — is the major difference between Spotify and other streaming services that have taken hold in the U.S. with varying degrees of success while Spotify was growing in Europe. Rhapsody, Rdio, MOG and other services that offer subscription access to large databases of music all charge a fee for access. In order to offer its free version, Spotify has spent the last year negotiating licensing deals with the four major labels in the U.S.; The New York Times reported yesterday that it just finalized a deal with the fourth, Warner Music Group, on Wednesday afternoon.

Ease of use and catalog size are the second and third tentpoles for Spotify. Ken Parks, the company's chief content officer, describes the service as "dead simple."

"Picture a shelf of music in your house with 15 million records and with one click you can sort of pull down any record and start listening to it within a fraction of a second," Parks says.

You'll deal with some restrictions if you want to use the free version. It comes saddled with a few advertisements, as well as limits on the number of hours you can listen each month — 20 for the first six months of your membership, 10 after that, and you can listen to each song only five times per month*. More importantly for the time being, it will also require an invitation from the company, which you can request at its website.

*Update (7/14/11 at 5:30pm):The limitations will actually work a little differently than we originally reported, according to Spotify. If you manage to get an invitation, you'll have unlimited PC access for six months, with ads. After six months, the limit will be 10 hours per month and 5 plays per track. After the invite-only phase ends, Spotify will offer the regular free service to everyone, but at that point the introductory six-month offer will include a cap of 20 hours per month.

And of course, while Spotify's new ads tout "free!" as the service's biggest selling point, what the company actually wants is paid subscribers. Indeed, users who want to skip the ads and the wait for an invitation can sign up for one of two paid plans right now: "Unlimited," for $4.99 per month, gives you the service ad free and without time limits; "Premium," for $9.99 per month, adds features like mobile access, an offline mode that allows access to stored playlists when you're not on the Internet, and "enhanced sound quality."

Spotify calls the step up from free streaming via the web to premium usage on mobile devices a "freemium" model. Mark Mulligan, a U.K.-based journalist who writes the Music Industry Blog and has used Spotify for a year and a half, says at the lower end, the service "strips down digital music to the bones." It's particularly good, Mulligan says, at using technology to make the complications of the business invisible. "You click, it plays, and it's just there."

The question that remains is whether the limitations on the free plan, once they're in place, will act as an impediment to free users or prompt them to buy into the fee-based plans. Mulligan says that in the U.K., both things have happened.

"Spotify went from having a highly engaged user base of coming over 10 million users," Mulligan says. "By the start of 2011 they reported that they had converted 1 million people to the premium subscription, which was a huge achievement, but that their active number had fallen to 6.7 million. They'd essentially lost about a third of the user base as active users."

All of the plans in the U.S. version of Spotify include integration with Facebook — you can make playlists with friends and see what other people like — as well as the ability to import the music you own into your library.

Even the "Premium" service isn't completely comprehensive. Spotify has made deals with the four major labels, but there are some big indie holes. Searches revealed that recent albums by Gillian Welch, Shabazz Palaces and Ty Segall haven't made it into the service's catalog yet. If you own those albums, you can have Spotify search your hard drive and add them to your library, but you can't go to Spotify to sample anything from, say, Sub Pop**. Not yet, anyway. If the demand for the service matches the anticipation, there probably won't be many holdouts for long. Spotify says it's currently got 15 million songs in its database, and claims to be adding 10,000 each day.

**Update (7/13/11 at 5:30pm): Spotify clears this up as well. They do, in fact, have a contract with Sub Pop. The fact that a number of albums from the label weren't available this morning is due to the fact that they're still in the process of loading many songs into their digital catalog.

Glenn Peoples, a senior analyst for Billboard magazine, says that the combination of catalog, ease of use, and flexible pricing might attract the audience that has eluded streaming services in the past.

"I think that Spotify's freemium model is an acknowledgment that not everybody puts the same value on music," Peoples says. A truly attractive streaming service is "something the market hasn't seen yet. Something that really attracts not just hard-core music people but mainstream people and price-conscious people and people who were pirating music before."

Peoples says that Spotify will test the question of whether the U.S. audience will ever use a subscription model.

We'll keep using the service, and offer updates later, but if you're using Spotify now, let us know what you think. What do you want from a music player?

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