Spotify Planning Launches in Italy, Poland and (Reportedly) Japan: What Are the Challenges?

Spotify looks to expand to Italy, Poland and Japan.

(from Billboard Magazine, October 12, 2012) According to job postings on their website, Spotify, a free and legal music streaming system, is planning launches in Italy and Poland. They are also considering a launch in Japan in 2013. It came as a surprise to many that Spotify is interested in Japan as a possible market. Although this country is the world’s second-largest music market to the U.S., Spotify would have to build the market for a subscription service on its own. The only service operating in Japan right now is Sony’s Music Unlimited, which was launched in July. This service is a value-added feature for Sony electronics, so when it was released it was as a soft-launch, and could be eased into the consumer’s way of listening to music. This could be a disadvantage to Spotify since they would be introducing an entire new service to Japan, which would require much larger initial investments to get them interested. Another issue is that only 24% of Japanese consumers own a smart phone, and subscriptions services make more money from smart phones users, because of the service charges for mobile access. Spotify will either have to wait until more consumers in Japan own smart phones, or start partnerships with TV and cable companies.

Japan may be a difficult market to enter into, but European markets will be easier since they already have subscription services operating there. Italy has a music market perfect for subscription services. The trade value of this country’s physical market has decreased $158 million from 2007 to 2011, but the digital revenue has grown $21 million from 2007 to 2011. Subscriptions currently available in Italy are Deezer, Music Unlimited, Rara.com, Feezy, Play.me, and Samsung Music Hub. In Poland, 25% of the $4.3 million digital market was subscription services in 2011. This means that Spotify will not have a specific download market to face, and Poland will be more open minded to their streaming services. Subscription services already operating in Poland are Deezer and Muzodajnia.