Music streaming: free is the key

In first, streaming top earner for US music business

Competing music streaming services are beginning to discover that the best way to get consumers to sign up and to start paying a monthly subscription is to offer a free tier, too.

On Wednesday, Google announced that Google Play Music subscribers can now upload and store 50,000 tracks to the cloud free of charge that they can then stream via a smartphone, tablet or even desktop whenever they've got an internet connection.

The offer's interesting partly because it recognizes that older consumers already have a record collection that they value and want to listen to -- therefore making its streaming and music downloading services more attractive propositions -- but also because over at Apple, customers are only currently able to upload 25,000 tracks to iCloud for streaming and they have to pay $24.99 a year for the privilege.

And that's why Apple offers those customers -- in the US and Australia for the moment -- advertising-free access to iTunes Radio, for no extra charge.

However, neither company is a patch on Spotify, which currently boasts 15 million paying subscribers. A year ago, that number stood at 12 million and the huge jump, according to Spotify vice president of North American advertising Brian Benedik, is because the company now offers a free tier of its streaming service across mobile devices as well as on the desktop.

Speaking at the Venture Beat Mobile Summit this week, he revealed that before the free mobile tier was introduced, 90% of users accessed Spotify via the desktop, now more than 50% of global users are mobile.

"Premium doesn't work without free. There's a graveyard of services that have tried to go at this over the last ten years with premium only. It doesn't work unless you've got free and premium working together," Benedik is quoted as saying.

According to online security company AVG Group, which offers a handset performance monitoring app to Android users, 600,000 of its 1 million customers are now running Spotify's app on their devices.

And, free access is the best way of convincing someone of the value of a premium version: "The longer you stay on [Spotify's] free model, the more you are likely to upgrade to premium," said Benedik.