Let’s assume, for the sake of example (and hope), that Apple do indeed allow Spotify into the app store. Will users even be allowed to use it? Like the AT&T deal in the States, the iPhone is tied to a single network in the UK: O2.

Tucked away in the O2 terms and conditions, if you can be bothered to look, is this bombshell:

You may not use your SIM Card:

• in, or connected to, any other device including modems;
• to allow the continuous streaming of any audio / video content, enable Voice over Internet (Voip), P2P or file sharing; or
• in such a way that adversely impacts the service to other O2 customers.

We’ve all been talking about whether Apple will allow it, but will O2? I’ve been in touch – hopefully we can find out.

Apple has rejected the Google’s Voice application for the iPhone saying that it duplicated features in the popular smart phone. The move has called into question the control that Apple exerts over approving applications and whether the rejection and others constitute anti-competitive behaviour.

Does Spotify duplicate an existing iPhone feature?

The Swedish music streaming service Spotify is planning to launch its first mobile application within days.

The company has submitted the application to Apple’s iTunes App Store for its approval.

If given clearance, Spotify’s service will then be available for users to download onto iPhones.

From BBC News

Great! A post on the BBC’’s dot.life blog goes into greater depth:

I can now reveal – having played with a beta version for a few days – that the version submitted to Apple will allow users to take their existing playlists with them on the phone and to search over wi-fi or a 3G network for new tracks – but there’s another “killer app” to this app. It allows you to download songs or entire playlists so that you can take them with you on the phone – and listen even when you don’t have a signal or a wi-fi connection.

And there we have it. The business model. The model that’ll make any music lover think “Ah yes, that premium subscription is a very nice idea!”. Hopefully.

Still a few issues to overcome, though. Firstly, Apple may not even let it in the app store, so we may just be getting excited over nothing. But, as Rory Cellen-Jones points out in that post, Apple could be seen to be anti-competitive – which could lead to problems.

Second, if this app is only available for premium subscribers, then it could struggle to gather the mass appeal that the desktop client has. Perhaps the answer may be that it’s free to stream music, but in order to pre-load playlists for offline listening you have to be a subscriber. Seems like the decent middle ground to me.

UPDATE: Wired.com have a few more screenshots of the app in action here.

UPDATE 2: Here’s the app in all its glory. Looks great!

UPDATE 3: The app will, at least initially, be just for premium members. From the official Spotify blog:

Our iPhone version is very similar to the Spotify you’re already familiar with and will allow you to listen to your music even when you’re not connected to a network. The application should be available in a few weeks for premium subscribers – we’ll be sure to let you know as soon as it’s in AppStore.

From the London Evening Standard:

“We looked at the mobile market, and it just doesn’t make sense to stream music in the same way we do on a PC,” said Mr Sehr. Streaming directly to phones would rely on users always having a strong mobile phone signal, and could also overwhelm mobile networks if the service becomes too popular. For Londoners, there is another big problem: streaming wouldn’t work on the Tube.

“Users will be able to choose the playlists they want, and download them via their home wifi connection before they leave. For London, this was crucial, as we want people to be able to listen on the Tube.”

However, there could be a problem. To be successful in the mobile market, Spotify needs to be accessible via aniPhone and an iPod. Technically, this is no problem. The sticking point is that Apple must approve any software that runs on its iPhone and iPod, and even Spotify admit they are simply not sure if this will happen, as Apple’s iTunes music download store is such a direct competitor.

“We really don’t know if Apple will give us the go-ahead, and all we can do it submit our software then wait and see,” admits Mr Sehr. “It’s something of a black hole.”

Who know’s what’ll happen. One the one hand, the application will probably be extremely popular, which means lots of revenue for Apple through sales. But it’s a double-edged sword, of course, as an expanding Spotify could potentially mean fewer iTune store downloads.

On the other hand, will Apple want the iPhone to be the only mobile device that can’t have a Spotify app? Assuming that the app will be awesome, it would quickly become a critical factor in my choice of phone whether I could use the service or not.

Which leads to another point. Getting it on the iPhone is just one tiny battle for mobile music supremacy. What about Nokia? Aren’t they selling mobiles on the back of their rubbishy (so a friend says) music store too? How will they feel about Spotify coming along? Not that they’d have much choice, of course – you can put whatever you like on Nokia devices, unlike the ‘locked’ iPhone.

It’s set to be an interesting few months.

From the article:

Spotify’s new billboard format will see full-screen ads served over the Spotify application once a user has been inactive for five minutes.

The ads will complement 3 Mobile’s free Skype to Skype calls campaign on pay as you go campaign.

The billboard will remain in view until the user once again becomes active, such as rolling over the screen, after which it will scroll down into the leaderboard.

Nice idea. Rather than being overwhelmingly intrusive, the ad appears when you leave your computer idle. That could mean, though, that the ad will hardly ever appear – especially if you’re type of user who has Spotify running in the background while you get on with other things. And isn’t that all of us?

The Spotify Blog wonders if this advertising deal with 3 may lead to some sort of tie-up when the mobile Spotify service launches. Hmmm.

On the deal with U2:

“In terms of demonstrating just how far we’d come in a relatively short space of time, getting U2’s first album in four years was a serious landmark, as was just announcing we’d reached one million users globally”

On the successes of the advertising model:

“Practically everybody has been positive and feel that to listen to a near-unlimited amount of music for free with an ad every 20 minutes or so is a reasonable compromise. It’s certainly a lot less than anything they’d have on commercial radio, for instance, with the added bonus that they get to listen to exactly what they want.”

On selling Spotify to potential advertisers:

“The content on Spotify is different from the content on YouTube, as you don’t know on YouTube if it’s a clip of a guy picking his nose or if it’s quality content. To pitch Spotify to an advertiser, they know that they are in a clean environment with high quality content.”

On future advertising plans, and ‘genre marketing’:

“We can also facilitate a number of things for advertisers such as mood targeting, plus we can target demographics more clearly than offline media channels. For instance, we will be introducing age and sex, geographical (e.g. England or Manchester style focus) as well as socio-demographic (e.g. ABC1) targeting. This year we’re also looking to launch genre targeting which can be layered onto the other targeting options.”

Who they’re working with:

“COI, Xbox, T-Mobile, Vodafone, Philips, HMV, Sainsbury’s, Nissan, Sony Pictures, Paramount, Universal and findanyfilm.com.”

On solving the problem of missing artists like Led Zep, The Beatles and Chas ‘n’ Dave*:

“We’re hoping that once people see how Spotify can provide an alternative to piracy that allows the artist to get paid for the music they provide, we’ll be able to create the most diverse music experience on the planet.”

On Spotify for iPhone:

“I can’t comment on the specifics, but we’re excited about platforms such as the iPhone as they enable third-party developers such as ourselves to develop interesting functionality.”

Interesting stuff. Seems the ultimate key to success will lie with the advertising enchancements. Ek seems positive that the vast majority of Spotify users will always have free memberships. This is fine, so long as they can make the advertising more, as Ek says, bespoke to each client.

Personally, there can be no harm in targeted ads á la Facebook. If you’re listening to rock and you get a rock-related advert – everyone is happy with the arrangement.

(*The Spotify Blog was devestated to learn that Chas ‘n’ Dave are absent from the library.)

Luckily, the Spotify team are under no illusions. New Media Age reports some of the ideas they’ve been drumming up to bring in the punters:

“The idea is to have a service with more features and functionality that will draw people in,” he said.

Brown, formerly international MD of Pandora, said a rich collection of premium services was set to be ramped up over the next few months, backed by marketing efforts.

“The way I see it happening for us is to create value by being a hub that has great channels, great things to do and a great music listening experience across lots of different platforms,” he said.

T3 magazine has a few more direct ideas, including making the mobile app a paid-for feature:

One such feature has already been showcased, Spotify on mobile phones. But that’s just one piece in the jigsaw, with Spotify also looking at living-room access, higher quality streams, bundled downloads, recommendations, ticketing and social features. If all those new features come in for the same £9.99 price, the new service will have ‘winner’ stamped all over it.

We agree.

Why all this talk of the pay model all of a sudden? A deal struck by Virgin Media with Universal allowing Virgin customers unlimited downloads of Universal tracks has blown the streaming music market wide open. The Virgin deal is all well and good, but Napster’s VP of sales and marketing for Europe, Thorsten Schliesche, sees a major flaw:

“The worst case is if Sky and Virgin only launch with Universal Music so the first experience for the customer is that not all content is available,” he said, adding there was a danger of ISPs feeling pressured to launch music services by the Government as it tackles piracy.

If you haven’t seen it yet, here’s the mobile app (yet to be released) in action: