@The original Ash
My point exactly. Once habit is set, it is very hard to recede. Their free service is way too similar to the premium service to convince sufficient subscribers to jump to a subscriber service. Possible Solutions?: stream half a song for every song, severely increase the frequency of the disturbance (adverts) etc etc., yet make people feel how good a service it is (good as snappy, quick, intuitive etc etc. Availalbitlity of catalogue (the magical: "whatever song I think about - it's there!"), speed and reliability of the interface, smoothness of streaming, quality of the APIs. But for God's sake, make people pay for the damn service.
@James Hughes :
difficult to increase it slowly, people will migrate to other incumbent services who are sitting at the edge of the market - there is nothing really proprietary about the Spotify technology, it can (and will be) replicated - proprietary is the breadth of licensing they managed to achieve (but then again, Record labels will do deals with anyone today, so newcomers to the game may even get better deals than Spotify - hence enjoy a lower cost base) and, if they survive long enough, proprietary is their brand.
Fact of the matter is: the streaming services do not pay much royalties to aggregators/labels and therefore to artists.
Once people went mental and said music=water the damage was done (ok ok the internet may have something to do with it...)
My curiosity is rather: what kinds of accessory services could Spotify offer? (if it doesn't it will eventually die and be superseeded)