Spotify's U.S. Arrival Bodes a Shakeup for Online Music

Last Updated Jul 14, 2011 1:06 PM EDT

After two years of gangbuster success in Europe, Spotify, a free music streaming service, has landed in the United States. Everyone from Wired to MSNBC to Facebook's Mark Zuckerberg are raving.

Along with many others, I am currently on the site's wait list to receive a free, ad-supported membership, which will give me access via my laptop to Spotify's 15 million tunes. The free membership will only provide unlimited access to its songs for six months; after that, the cap is 10 hours per month and 5 times per single song. I can live with that -- but I've read, unfortunately, that my invitation could take weeks to arrive.

For those who crave instant access, there are two subscription-based memberships: "Spotify Premium" for $5 a month, which lets you listen to music without ads on your PC, and "Unlimited" for $10 a month that lets you stream music with or without a web connection on your PC, iPhone or any mobile device running Android, Palm or Windows 7. (Take note, iTunes addicts, the Unlimited plan is one way to satisfy your music fix for less -- especially if you enjoy using your phone as a music player while exercising.)

Spotify will, of course, have tons of competition from other music streaming services -- a diverse group that includes Pandora, Rdio, Rhapsody, Last.fm, Sonos, Turntable.fm and Napster. Spotify's competitive advantages include a comprehensive music library and, for the basic version, the 'free' pricetag.

Pandora, which went public last month, is also free and lets you stream music from your PC or laptop. But Pandora doesn't let users select individual songs; they can only listen to themed stations, similar to the radio. Spotify is considered such a threat to Pandora that analyst Rich Tullo of Albert Fried & Co. recently downgraded his rating of the company to "sell." Spotify has also announced an alliance with Facebook, which means an even greater leg up in the market.

This will definitely be an interesting match to watch. Who will prevail? And can Spotify earn the same worshiped status here that it currently has in Europe? I'll keep you posted ... once my free membership arrives.

Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter/farnoosh

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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.

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