Saturday, 15 August 2009

Spotify goes China

Spotify, the UK-based streaming music service launched last October, this week surprised its growing fan community with news that it will launch in China.

The launch will be made in partnership with Chinese media company TOM Group, a subsidiary of Hutchison Whampoa with reportedly some 300 million users in China. It might be backed by an investment injection of up to $50m from high-profile investors including the charitable foundation of Hong Kong tycoon Li Ka-shing, valuing Spotify at $250m, as the Financial Times reported earlier this month.

Instead of conquering more Western countries (most notably the US) first, Spotify decided to tackle the far more difficult market of mainland China, where internet users are already very familiar with free online streaming portals offered by main telecom operators, as well as a whole range of illegal music download websites, such as search engine Baidu.

While Spotify is praised by users for its tremendous offer of music, for the Chinese market it will have to ramp up its Chinese artist portfolio. If it gets more Chinese labels to sign up, its free advertising-supported service could become as successful as in Europe. However, Chinese users might be even less willing to sign up for its premium subscription service for which they have to pay a monthly fee to receive the service without advertisements.

So the US market has to wait for the time being – maybe one of the reasons for this is that Spotify is still busy negotiating an iPhone application with Apple? Meanwhile in Sweden, The Local reported that Sony BMG Sweden confirmed that in terms of monthly revenue, proceeds from Spotify now exceed iTunes.

More information on Spotify’s China launch is available here and here.

No comments: