Contestable Markets - Spotify takes on iTunes

Here is the latest move in the battle for position, power and profitability in the market for digital downloads. Spotify the music streaming service based in Sweden has submitted an application to Apple for their iPhone that will allow their premium service users to search for music on the Spotify playlists and download their free library of songs onto their mobile phone.

Spotify say that the free application for the iPhone has met all of the developer guidelines required by Apple. The application will not allow users to buy music from the iTunes online store and herein lies the stumbling block! Will Apple really allow potentially one of its major rivals in the market place to find a home on the ultra-popular iPhone? Their dominance of the mobile phone music market looks too strong and too profitable to allow this new application. Spotify has become tremendously popular within a short space of time - it is claimed that they have over two million users in the UK alone.

The advertising-funded version of Spotify is free of charge The premium service costs Euro 9.99 a month Apple has already approved several other music services such as Last.fm, Deezer and Pandora but these are much smaller competitors Music technology experts say that one of the main advantages of the Spotify application for the iPhone is offline play - push a button to download your Spotify playlists containing up to 3,333 songs to the app for playing whilst not connected

Here Rory Cellan-Jones from the BBC test drives the new Spotify application

And this Guardian editorial sings the praises of being able to listen to music without paying over the odds

Update: In August 2009 Apple announced that it had approved the bid for an iPhone app from Spotify. Details here