Belfast Telegraph

How to spot an opportunity online when it comes along

By Darren Lemon

If you haven’t yet heard of Spotify ( ) you are in a rapidly dwindling minority.

The “buzz” surrounding the company is so intense that it has caused it to attract the wrong sort of attention — from hackers. But more of that in a moment.

First, an introduction to Spotify for anyone who needs it.

It’s a music service that some people believe could spell doom for iTunes ( itunes ) or even for the CD. It launched last October and already has a million users.

And it works like this: users download a small application which allows them to listen to any track from thousands of albums at any time.

The key difference between this and iTunes is that customers never actually own the music.

But that’s a small consideration when set alongside the vast catalogue that’s available. Best of all, it’s perfectly legal.

Most record companies and artists are signed up to it (the main exceptions being the Beatles, Pink Floyd and Led Zeppelin).

The problem for iTunes and the makers of MP3 players is that the company is currently working on an application for the iPhone and other mobile devices.

Why would anyone need an MP3 player with a relatively small selection of tracks when they could have access to tens of thousands of albums via a Wi-Fi connection?

Spotify is the most talked-about start-up of the last year, not just because it provides a service that is much in demand, but also because of its interesting model of financing itself.

Premium users, who pay £9.99 a month, do not see advertisements served up to them every 20 minutes.

But you can enjoy the music for free, if you are willing to watch the commercials.

In other words, the service is funded by both advertisements and subscription, which doesn’t leave it solely dependent on one or the other.

That’s not the only advantage.

Until now, use of the free service has been by invitation only. But people who sign up for the premium service have been given two invitations each, allowing them to encourage friends and family to join. It’s viral marketing at its best. That’s why the company has been able to add a million users since the autumn.

As the internet magazine New Media Age ( ) points out, even the advertising is cleverly targeted according to the listener’s physical location or the mood of the music being listened to.

Brands such as the Xbox ( ), Sainsbury’s ( ) and Sony Pictures ( ) have already run campaigns on the site. Interestingly, the Central Office of Information ( www.coi. ) has also made use of it.

Spotify is by no means the only free music site part-funded by commercials. Last FM ( ), MySpace Music ( ) and WE7 ( ) all provide similar services.

But the new entrant into the market has — thanks to the “buzz” around its word-of-mouth marketing campaign — spawned a range of other web sites where users share their favourite music.

At and , for example, users can click on other people’s playlists, taking them to an already assembled collection of tracks on the main Spotify site. So it ticks the social networking box as well.

If it all seems too good to be true, the site’s sudden popularity recently made it the target of hackers, who may have stolen the personal details of people who signed up before December 19, 2008. Credit card details, however, were not among them, because they are not stored.

It remains to be seen how much Spotify can change our listening habits, but it’s interesting to note that U2’s new album, No Line on the Horizon, made its debut on the site as soon as it was released.

Unfortunately, it appears that Bono had never heard of Spotify until the BBC’s Simon Mayo told him about it on air.

Still, he has the excuse that the site is most popular among people aged between 25 and 35!

Darren Lemon is general manager of eircom NI ( ). His email address is Darren.lemon .

Belfast Telegraph