Spotify Makes Its First Moves Into Asia Via Singapore, Hong Kong And Malaysia; Latin America Via Mexico; And Four More In Europe [Update]

Next Story

GSF India, Which Aims To Be The “TechStars Of The Emerging World,” Partners With MIT

Music streaming service Spotify has finally come to Asia. Today, it announced that it would be launching in the cities of Singapore, Hong Kong and Malaysia. Its premium service, priced at $9.99 per month in the US, will also be a little cheaper in the region, with Malaysians getting the lowest price. Update: after turning on Asia, Spotify posted on its blog that it now has also turned on services in Mexico (it’s first market in Latin America); as well as Estonia, Latvia, Lithuania and Iceland — bringing the total number of markets to 28.

In Singapore, the service is priced monthly at $7.99 (S$9.90), in Hong Kong it’s $6.18 (48 HKD) and in Malaysia it will be $4.90 (14.9 MYR). It’s practically the new Big Mac Index of music subscribers, going by Spotify’s head of new markets in Asia-Pacific, Sriram Krishnan. He told us the prices are a “sweet spot” based on deep studies of each market.

Spotify does come for free, but it premium users will be able to use its mobile apps, and get functions like offline caching, where songs are stored in devices and can be played without an Internet connection. Premium users also listen at 320 kbps, while free accounts stream at 160 kbps.

In an interview, Krishnan said Spotify has 24 million “active” users (he couldn’t define what “active” means in Spotify terms), and 6 million of those are paying. In comparison, fellow US music streaming site, Pandora, said recently that it has a base of about 200 million users, of which 70 million log in each month.

Spotify’s arrival in Asia marks one of the first times a paid streaming service has come to the region. Others such as Netflix and Pandora are missing. Users outside of the US used to be able to access Pandora by registering with a US postal code, but the service had to comply with DMCA regulations, and finally closed its doors to non-US users in 2007 through IP filtering.

Krishnan would not give specifics on the deals made in Asia, but said that Spotify’s size makes it more of a force to reckon with during negotiations with industry execs. “We’ve been around for five years. In the past four years, we gave back $500 million to the music industry. This year, we will give back another $500 million. Having reached this scale, we’re now taken seriously,” he said.

Media providers have been nervous coming into Asia because of piracy concerns. He acknowledged that piracy continues to be an issue here, but said that a premium service’s ability to offer a more convenient way to get content without going through the hassle of BitTorrenting a file would trump piracy.

Of course BitTorrent is free, and you could theoretically capture a streamed track in all its 320 kbps glory, but he said that free accounts would address that sort of behavior, and the premium accounts are there for people more serious about their music.

“Now that we’re in town, people have a way to access free legal music. We’re confident that our presence will revitalize the industry,” he said.

Besides piracy issues, a potential expansion to new markets with the risk that few may sign up for a subscription can be costly for middlemen services like Spotify, amid rising content prices from rights owners. In February, Pandora indicated that it paid $65.7 million for its content in the third quarter last year, and that per-track royalty rates have shot up more than 25 percent over the past three years. It also said it expects rates to increase by another 16 percent by 2015.

Spotify has a Hong Kong office, where Krishnan is based, and it is currently hiring sales and consumer marketing execs in its brand new Singapore office.