Spotify aims to take market share from iTunes

Last month Spotify announced one million paying subscribers

Online music service Spotify is turning up the heat on Apple as it aims to create an alternative to iTunes.

The company is extending many of its premium services, including an iPhone and iPod app, to non-paying members.

It is also encouraging customers to import their music collection into Spotify, rather than Apple's system.

However, analysts have questioned how much impact the service can have, given iTunes' dominance and its close integration with Apple devices.

At the heart of the update is an attempt to make Spotify a mobile platform for its 10m members.

9m of those use the free version of the service and until now did not have access to their music libraries via mobile devices such as iPods and mobile phones.

The update will allow them to synch all of their MP3 collection, including songs purchased from iTunes, from the desktop to a range of iPods, iPhones and mobiles using the Android operating system.

But streaming music, which is at the heart of what Spotify does, will still only be available to those who pay a monthly fee of between £5 and £9.99.

Restrictions

The move will be widely seen as an attempt to placate fans who were angered by restrictions recently imposed on the service.

The limits saw the amount of music that free users can listen to halved. It also reduced the number of times an individual track can be played to to five.

Gustav Soderstrom, chief product officer at Spotify, denied that there was any link between the new service and recent restrictions.

He said that it was a response to customer demand for a greater tie-up between the music they owned the service they used to create playlists.

"Users are juggling two products at the same time and they said they really wanted to synch their playlists with their iPods and iPhones," he said.

Ultimately, he agreed, the aim was to make iTunes redundant as a music player.

"We think this is a better experience. If it is not, people will go back to iTunes," he added.

For this ambitious plan to work Spotify will need to encourage users to download songs from Spotify rather than from iTunes.

Spotify has hammered out a deal with record labels which centres around the creation of bespoke playlists.

It will now offer bundles of tracks, with prices falling as more are bought. Ten tracks will cost £7.99, 15 tracks £9.99, 40 tracks £25 and 100 tracks £50.

Spotify hopes the innovation will breathe new life into its download service, which it admits has "been a bad experience" for users.

New clothes

However, Mark Mulligan, an analyst with Forrester Research, was underwhelmed by the changes.

"They don't sound like great discounts to me. All it is doing is applying album pricing to playlists. You might even be able to do that on iTunes already," he said.

"I can see what Spotify is trying to do, it wants to acquire the clothes of the more robust music services by offering ways of buying as well as listening to music and creating an alternative music management platform."

He suggested that Spotify would always lack the clout of Apple.

"iTunes is a very bloated music management service but people use it because it is tied to their devices. Apple offers access to the cloud, it has a billing relationship with users.

"Managing music from Spotify doesn't really do much. People will still have to go back to iTunes to buy new tracks. It is hard to see significant numbers of people using it," he said.