iCloud May Kill Spotify's American Dream

Apple's cloud product spells bad news for the world's leading music streaming site

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Apple is poised to roar into the cloud-based music space next week at a developer conference with a strategy that pits its service against similar ones from Amazon and Google. The fabled iCloud also stands to crush a former favorite streaming music service: Spotify. We observed last fall that Apple was likely positioning itself to beat the Sweden-based Spotify to the American market with a streaming music service, and last month, Spotify showed signs of struggle in convincing record companies to allow its generous free service to operate in the U.S. Ultimately, the company downgraded the amount of free music it offered to new customers, despite a relative outpouring of disapproval from users.

News broke this morning that Spotify's business head, Faisal Galaria, is leaving the company. Galaria--who had set international expansion as the company's top priority--joined Spotify from travel site Kayak in August 2009, but failed to sign America's big four record labels on before departing. (The company didn't reveal Galaria's future plans.) The Wall Street Journal reported yesterday that Apple's iCloud service would sign Universal, the fourth big label, later this week. Confirmation of the partnership coupled with the uncharacteristically clear vision offered of what the company would announce at next Monday's Worldwide Developer Conference is a sure bet that Apple reaching for the cloud market share.

Another aspect to the aggressive challenge has been mostly overlooked. A year ago to the day, Apple shuttered the streaming music service Lala, a company it had acquired in December 2009, launching rumors that iTunes would soon make an appearance in the streaming music space. Lala's departure from the market likely boosted Spotify's dominance--perhaps in proportion with how much Apple's new iCloud service will quash that dominance. One Apple fan blog phrased the coming effect pretty concisely with this headline: "Even in Utero, iCloud Is Killing Spotify."

This article is from the archive of our partner The Wire.