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Business News Digital
Spotify to launch in China
By CMU Editorial | Published on Thursday 13 August 2009
Spotify yesterday announced a new partnership with Chinese media conglom Tom Group which will bring the service to China. Under the agreement Tom Group will create a localized version of Spotify’s PC- and phone-based software to its customers.
The deal increases Spotify’s reach massively. Tom Group, the media arm of Hutchison Whampoa. which has previously done similar deals with eBay and Skype, has 300 million users in China, and a further 100 million in Greater China.
The deal will see Spotify go head to head with a number of other free streaming services, with China’s three main telecom companies, China Mobile, China Telecom and China Unicom, all operating similar services already. Not to mention Google China’s licensed music search service and fellow Chinese search company Baidu’s slightly controversial not really licensed music search engine.
Principal analyst at BDA, Liu Ning told Brand Republic: “Many local websites are already providing the same free services in China for online music streaming. I don’t expect Spotify to be popular in China, as Chinese people are not familiar with this website. It will depend on Spotify’s business models”.
But Sean Leow, co-founder of creative networking site Neocha.com, disagreed, saying that it was the best of the services available, though he noted that there are currently very few Chinese artists available on it. He said: “I think Spotify service is the best; it offers one of the largest bodies of streaming music available, [but has] a limited amount of Chinese musicians. Chinese music consumers are used to paying no money. I believe Spotify’s free service would do well in China, but its premium subscription service will find it more difficult”.
As previously reported, Spotify is reported to be planning to also roll out in the US later this year. When this happens depends partly on a new injection of venture capital. Following a valuation of $250 million last month, the company is apparently on the verge of gaining $50 million from the Li Ka-Shing Foundation and Wellington Partners and possibly one of the major labels.
It’s not clear who, under the Chinese deal, will cover the bandwidth and licensing costs of the China service. Providing the technology to other net firms who then cover running costs through local ad sales or subscription revenues will presumably be an attractive proposition to Team Spotify.
