Spotify streams into Canada as CD music sales fade out

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After years of speculation – during which myriad competitors entered the marketplace – the music-streaming service Spotify launched in Canada on Tuesday.

The Swedish service was founded in 2006 and ran an invitation-only soft-launch in Canada this summer. Largely considered to be the global leader in music streaming, Spotify has mulled the possibility of a Canadian launch for close to five years. In that time, such international competitors as San Fransicso's Rdio and homegrown services including CBC Music and Galaxie Mobile have satisfied the Canadian appetite for on-demand digital music.

Music fans with insatiable appetites flock to these services, which offer as many as 30 million songs with both free, ad-supported tiers and premium services that usually cost about $10 a month. But it's the early days of streaming, and casual music consumers have yet to adopt these services at a significant rate.

The scales, though, may be tipping. Last week the Recording Industry Association of America announced that revenue from streaming-music services overtook the sale of physical CDs, coming just a hair behind total physical sales. (Did you hear vinyl's making a comeback?) Permanent downloads still account for the most music revenue – 41 per cent – but streaming is coming up from behind, accounting for 27 per cent of industry revenues in the first half of 2014, versus 20 per cent the year prior.

Spotify arrival could signify similar shifts in Canada's market. Not that this will herald some kind of new golden age of Canadian music, though – there's little proof that the majority of artists gain much financially from streaming music. But it does offer more choice for the consumer.

"There might be a lot of services in Canada, but I don't think any single one has come out as a dominant service," said Andres Sehr, Spotify's marketing director, in an interview. He said the company focuses less on competition than it does building "the best possible music experience."

Mr. Sehr said the company waited out a Canadian launch as it negotiated music rights with labels and publishers, and generated content that speaks to Canadian audiences. Working with labels like Toronto's Arts & Crafts and artists like Leonard Cohen, Mr. Sehr said, the company developed playlists with Canadian content in mind. (Québécois hip hop, anyone?)

There are slew of slightly different but often confusing business models that streaming music services use, largely unsuccessfully, in their quest for profit. Spotify, Rdio and Deezer – all of which are now available in Canada – let users build their own libraries and playlists from catalogues of 25 million to 30 million songs. These what-you-want-when-you-want services can effectively replace the need to own a music collection. While Rdio doesn't disclose many numbers, Spotify has said it has as many as 10 million paid users.

To casual observers, the nuances that separate these services are minimal. Most, as with Rdio, have tiered offerings that range from free, ad-supported playlists to monthly paid memberships that allow unlimited access to Web and mobile music streaming for $5 to $10. But while video-streaming giant Netflix has scaled large enough to turn a profit, no such luck has been had in the realm of music (save for publicly traded Pandora, which has struggled to maintain investor confidence).

Canadians already have several decent options for streaming, and Spotify won't be the last one in. CBC Music, the online and mobile streaming service launched by the public broadcaster in 2012, sent out a release on Monday – less than 24 hours before Spotify's official launch – reiterating the benefits of its free service. Meanwhile, Reuters is reporting that Google – which owns streaming video juggernaut YouTube and recently acquired playlist-focused music-streaming service Songza – is planning to revamp its own music strategy.

But the arrival of more players in a small market like Canada is not something that rattles Anthony Bay, chief executive of Rdio Inc., which has long played second fiddle to Spotify. Earlier in September, he told The Globe and Mail "We don't have to get 100 per cent [market share] to be successful."