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Posted at 03:20 PM ET, 07/15/2011

Netflix vs. Spotify

Photo gallery: The innovator of the week

GALLERY: Click the image above to view the past innovator match-ups.

It’s that time of the week again — time to vote for the greatest innovator of the week. This is part three of what we hope will be a long-running series where we ask you, the readers, to pick the greater innovator of the week.

Last week, we matched up President Obama with Facebook. According to the entirely non-scientific results, Obama is victorious, with 52 percent of the vote. But the polls are still open, so you could still help Facebook mount an upset.

This week’s match-up: Netflix vs. Spotify. If you haven’t been keeping up with the chatter this week, here’s some background.

Spotify: The popular streaming music service has landed in the United States after years — yes, years — of anticipation, speculation and rumor-mill grinding. The launch came after the four major record labels and a number of independents agreed to make their music available to U.S. users for a fee or on an ad-based freemium service.


A Web page displaying Spotify Ltd.'s Spotify music site. (DAVID PAUL MORRIS/BLOOMBERG)
The free Spotify service is invitation-only. Invitations were available briefly through the Twitter “influence” ranking service Klout, calling them their “exclusive U.S. social launch partner,” according to a news release from Klout. The release went on to say that “users with influence — people who will build buzz around the Spotify service,” would be granted one of 100,000 invitations to join Spotify’s free, ad-based service. The invitations ran out within hours.

However, Spotify is only new in the United States, and is offering U.S. users perks, such as unlimited streaming time, that it is no longer offering its European users who have had access to Spotify for years. The service announced this week that it would halve the number of streaming hours — from 20 to 10 — for European freemium users. So, for the U.S. freemium users, it’s only a matter of time.

The U.S. Spotify launch was highly anticipated, and there’s no question that the company accomplished a coup of sorts by bringing the major record labels on board to create what is, essentially, iTunes for free (for some, at least). But how innovative is Spotify? How well did it handle its U.S. launch, and is it on a downhill path with U.S. users as they watch their European counterparts getting squeezed out of the freemium service perks?

Netflix: Unlike Spotify, Netflix has been around for a while. The company launched a coup of its own when it started, by bringing the big TV and film production studios in to offer the ultimate film library for a nominal fee to subscribers. Originally, films were only available via the postal service. Now, Netflix’s streaming service is one of the most frequently accessed parts of the Web.


The Netflix headquarters in Los Gatos, Calif. (PAUL SAKUMA/ASSOCIATED PRESS)
Netflix, which has always been known for being relatively affordable, given the number of films it makes available to its users, hiked its rates this week, splitting its streaming and mail services. The changes amount to a roughly $6 price increase in the monthly cost of the service. The announcement led to an inevitable backlash against the company on nearly every social media outlet available, including the comments on Netflix’s blog (they were maxed out within hours).

Netflix argued that the price increase and plan change was to accommodate users who wanted a mail-only service. But the change could backfire. As The Post’s Cecilia Kang writes:

Its new pricing plans could drastically change its business. DVD-only plans could actually make that business disappear earlier. Streaming customers may be more inclined to give up their DVD services.
The DVD-by-mail service is much more costly than streaming. Postage, inventory and handling of DVDs are expenses that have weighed on the company’s bottom line.

Netflix has changed the movie-viewing landscape fundamentally. But how innovative has it been in responding to customer’s demands, and could it be innovating itself out of existence?

All right, the entirely, 100 percent un-scientific poll is open, and the comments are yours. Who’s this week’s greater innovator?

By  |  03:20 PM ET, 07/15/2011

Categories:  Business, Innovator of the Week, Technology

 
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