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By Seb Janacek, 29 July 2009 15:14

COMMENT

Why would Apple let an iTunes rival run on the iPhone? Seb Janacek offers several plausible explanations.

Gloriously sexy online music service Spotify has submitted an iPhone app to Apple for entry into the iTunes Store.

This is very exciting - for Spotify, for Apple and, yes, for me.

For the uninitiated, Spotify is essentially an online version of iTunes that allows you to listen to any track in its huge library. Unlike similar applications like last.fm, it gives the listener complete control over which tracks are played and when.

A real killer feature is the ability to download and store tracks on portable devices. Perfect for iPod Touch users.

The free version of Spotify provides access to the entire library of music but listening is interrupted every 20 minutes or so by Spotify employees pointing out how nice it would be to listen to your music in peace - and reminding you that £9.99 a month is all it would take to bring this about.

A premium account would be needed for access to the service via the iPhone.

Needless to say, if the app is approved the company stands to make a ridiculous amount of money from sales of premium subscriptions.

However, given that Spotify is being referred to in some circles as an 'iTunes killer', you might bet against it getting Apple's stamp of approval.

A Spotify spokesman told the Evening Standard last week: "We really don't know if Apple will give us the go-ahead, and all we can do is submit our software, then wait and see. It's something of a black hole."

This is a key moment for the iTunes model.

The iTunes Store was and remains part of Apple's wildly successful vertical strategy for selling iPods, iPhones and media - one which Apple has resisted changing too much in the past.

On the surface it seems implausible that Apple will welcome Spotify into the fold, as it's such a direct competitor with iTunes.

Yet if reports that the iPhone and iPod Touch are cannibalising traditional iPod sales are to be believed, the model may be evolving into something different and more cloud-based.

Also remember that the revenue Apple makes from sales of music tracks is dwarfed compared to the money it makes from selling devices.

In this light, the Spotify iPhone app could be useful to Apple - by helping it sell even more iPhones, particularly when Spotify is launched in the US later this year (as expected - currently it's only available in Europe). Imagine how popular it could be with college students alone.

Why else would Apple approve Spotify? Well, the music service will certainly be coming to iPhone's competitors, including Android devices. Given that Apple is expected to block the Palm Pre's access to iTunes, you might bet Palm would welcome Spotify too. It may be unpalatable to Apple to give its competitors a headstart.

I considered writing an article about the potential for a Spotify app on the iPhone about six months ago when I first started using the service. I stopped at the point where I reasoned that if Apple released a Spotify app for the iPhone, I would never need to buy music again.

The £9.99 premium looks reasonable despite the fact that I rarely spend that much on CDs or iTunes or Amazon downloads in a month. The value has to do with the easy access I get to the four million songs on Spotify.

Apple made the '5,000 songs in your pocket' message a key part of its successful iPod marketing strategy.

As its commercial focus turns increasingly to the iPhone and the iPod Touch, imagine how powerful the message 'four million songs in your pocket' might prove.