Apple iTunes, meet your nemesis. Spotify.

Spotify is to Apple iTunes music as Google is to Newspapers. Oh, yae! Game on.

Let me explain… 

Today, Spotify — the much talked about music service from Europe — finally surprised everyone by actually launching in the US and I had a chance to give it a spin. Spotify reminds me of Rdio (a similar music service I really liked) and is the second coming of Napster from bad boy entrepreneur, Sean Parker. But this time it’s legit (yes, music labels are on-board this time), and boy, what a ride this is gonna be.

There’s a new Kid on the block, iTunes. Spotify.

For starters, let’s talk about Apple Ping.

In the history of my Apple usage, there are two services that I’ve been completely disappointed with and they are: MobileMe (cloud service) and Ping (iTunes Social) or “the Suck” as I call it.

I’m not gonna rehash my dislike of Ping, but as a product it sucked and for a company as awesome as Apple (especially in the music space), it was a huge letdown for users that Jobs and team just didn’t get social.

Enter Spotify.

How it works.

Now Rdio had done this before but Spotify is better in some subtle ways so I’m gonna focus this review on Spotify alone. Frankly, these guys have nailed the freemium model: There’s just enough for everybody in every pricing tier. I’m a free user and I don’t see myself upgrading anytime soon (unless if they start limiting the hours of music I can listen to, like they did in Europe). Here’s a breakdown of what each group of users get.

Even the pricing is great. I easily see myself moving to the $5 / month tier very soon if I find myself listening to a lot more music on Spotify. Chances that I’ll get there are high because of the desktop app that indexes my home music and the more I use Spotify to discover new music, the more it becomes my default music listening app. More on this in just a second. But, this desktop app is sheer genius and is the biggest difference with Rdio (which is completely web based and follows a similar pricing model).

And, if I get to the $5 mark, chances are I’d be curating a lot more playlists and then bam! I’ll want to move up to the $10 / month tier when I’d like to sync my playlists with my iPhone / iPod. The reason it works is that most people have a gazillion songs but then you usually end up listening to your favorites over and over again. While not all of us are gonna curate a bunch of playlists, I’m sure you’ll figure out a way to create one that plays top-of-mind music for you or find ones curated by your friends that you can subscribe to.

It just works.

For new users, the ramp-up is seamless, quick and the streaming of music is instant. Yes, this is a peer-to-peer service and the technology behind the streaming is peerless. Your user interface is broken down into three parts (See pic above):

A. Search and find new music, get recommendations from friends (Inbox)

B. Index and search your own music

C. Curate playlists (that you can share with your friends and take with you on your mobile music player)

It’s got cool friends.

Now, this is where it gets really cool. Imagine Facebook meets Spotify. Now that Facebook has changed the landscape of social gaming, they will obviously look into the next frontier that lets them scale to a billion users. What’s more social than entertainment. And, if you thought music was important to you, think of the Bieber crowd (just check the top 10 songs on iTunes — its driven entirely by that audience) that’s growing up with the instant gratification mindset — this will be the tool that lets them get any music when they want, where they want it and most importantly that their friends deem cool.

Music could be Facebook’s next Photos app. And, Facebook’s 750 million users gives Spotify a way to grow their audience globally, rapidly. No wonder Zuckerberg deflected Jobs’ reality distortion field when Jobs met him around the time Ping launched on using Facebook Connect within iTunes.

It replaces iTunes.

As I mentioned earlier, the genius with Spotify is that it becomes the default way I interact with my music (since it indexes my music, it becomes the user interface with which I search and stumble upon new music). What happens next? I will start using iTunes less. It took me seconds to start using Spotify as my default music player. Seamless.

Much like Google became the way you found news rather than going to the New York Times website. Spotify will become the place you find music vs. going to iTunes. Kinda like what iTunes did to the music store.

This is a generational shift much like social is today. iTunes will be around for a long while, but the next generation that gets Facebook will find Spotify (through them), and will not know what iTunes was and Apple won’t know what hit them.

Should Apple worry?

Hellz yae. Obviously, Apple’s investing in building our cloud services (Steve Jobs showed off his new data centers at the last keynote he did) but this is more than just storing your music on the cloud and taking it with you (don’t get me started on that — you still can’t sync your music via Wifi on iTunes — Spotify allows for that as well).

This is about how you find your music. In no other industry does social recommendations matter more than in music. Apple’s music future (much like Google’s today) will one day depend on social and they better prepare for that day, now.

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