Spotify, the internet music streaming company, is facing its biggest threat yet with the start of a new free service that allows users to listen to the same songs and albums, but without advertising breaks.
MySpace, the American social networking website, will this morning introduce its music service in Britain, offering access to free, unlimited streaming of what it claims is the most comprehensive catalogue of music on the internet.
Spotify, which has built up three million users in Britain since it began last year, offers listeners free streaming of tracks from artists as diverse Lily Allen and Shostakovich, but includes adverts every few songs. Users can also sign up to a premium service at £9.99 per month, with the commercials stripped out.
MySpace Music, owned by News Corporation, parent company of The Times, will offer a virtually identical catalogue, but will make its money from advertisements on screen and in music videos, rather than commercial breaks between songs.
Online platforms such as Spotify and We7, the British free streaming service, are considered by the music industry as key to help the fight against online piracy, which some say costs record companies £200 million per year in lost sales.
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Doubts have been raised about the viability of advertising-funded models of music distribution, as industry observers believe companies will not be able to make enough money from advertisements to outweigh the royalty rates they must pay to record labels and artists to stream the songs.
Courtney Holt, president of MySpace Music, said he believed the company could secure a return. “We believe that this will be a profitable venture for both us and the industry,” he said. “I want the consumer ultimately to be the winner. We want to be aggressive in participating in the future.”
The company is understood to be considering introducing a paid-for version of the service in the future.