09/30/2014 05:00 EDT | Updated 11/29/2014 05:59 EST

Spotify Launches In Canada

TORONTO - Spotify signalled on Tuesday that it's finally ready to compete in Canada with the multitude of music streaming services already on the market, including, Deezer, Google Play Music, Rara, Rdio, Slacker and Songza.

But there's a larger foe the streaming pioneer will have to fight as it tries to sell consumers on the concept of paying a monthly subscription fee for music: YouTube.

Just ask Rdio, which launched in Canada four years before Spotify with a virtually identical service.

Back in the summer of 2010, Rdio's founders believed music fans would eagerly embrace their offer: for just $10 a month — about the price of purchasing a single album — users could stream or download millions of songs to listen to on a computer or mobile device. They could have access to just about every song and album in the world — as long as they continued paying for a subscription.

Rdio has since appealed to thrifty consumers by offering some free versions of the service, which are subsidized by ads. But four years after it launched, Canadians are still not fully aware of what the company does, admits Rdio CEO Anthony Bay.

But he has a new sales pitch he hopes might work.

"What we found is if you say, 'It's like Netflix for music, except it has everything,' people get it. But it is clearly not as widely distributed and understood. That's been a little bit of a surprise," says Bay.

"I think once people get it, it is a remarkable value when you think you can essentially have everything on iTunes for $10 a month. The concept of Netflix caught on pretty quickly in Canada, and if you talk to Canadians about Netflix, people know what it means. If you talk to people about subscription music, in a sense they don't."

According to a telephone survey conducted for the Media Technology Monitor late last year, nearly two-thirds of the anglophone Canadians polled said they regularly streamed music online.

But only about one in five said they used a streaming service similar to Rdio or Spotify.

The most popular source for listening to music online was YouTube, with 53 per cent of the respondents saying they streamed tunes that way.

While not elegantly organized, YouTube hosts a treasure trove of videos and audio streams for music fans to access — and at zero cost.

"If you look globally, the largest streaming music service is YouTube and it's free with ads and people are quite happy to listen for free on YouTube," acknowledges Bay.

Given that most subscription-based streaming services offer very similar catalogues of music at the same price, Spotify is counting on its leadership position in the global market to help court Canadians.

Spotify boasts that it is the largest on-demand music streaming service in the world with 40 million active users, including 10 million paying subscribers.

The company had signalled in 2009 that it was looking to move into Canada within months but never did.

Getting the licensing rights secured for millions of songs is always a challenge for every new market, says Andres Sehr, Spotify's marketing director. But he wouldn't say exactly why it took so long for the service to launch here. Canada is Spotify's 58th market.

"I can't really say there's anything specific that stopped us (from launching in Canada earlier), obviously we're a big global business and our priorities change a little bit," Sehr said.

"The Canadian market is really important for us, it's one of the largest music markets, and I think it's more that we wanted to make sure we got it done right and back at that time as a company it wasn't right for us."

For the Media Technology Monitor's study on streaming music trends it commissioned Forum Research Inc. to speak with 4,009 anglophones by phone between Oct. 7 and Dec. 1, 2013. The survey results are considered accurate within 1.5 percentage points 19 times out of 20.

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