A newspaper here in Norway was questioning whether Spotify has a viable business model. On the face of things it doesn't look very promising. Spotify have to compensate the organizations that manage rights to music, it is questionable whether artists see much of this money and it is also questionable if Spotify can get enough paid subscriptions to make their business generate adequate income.
Doing business with any sort of content/rights owner is dodgy from the outset. These people are slow moving, greedy and have complex contractual restrictions based on an antiquated view of the world. They still live in the 80s and see the world as a myriad of disjoint markets. Their business practices have yet to adapt to the fact that geography has stopped mattering to the consumer and that segmentation by geographic region is a major driving force in piracy. People do not feel bad about downloading content that they were willing to pay for, but that nobody would sell them. I am not so sure people should feel bad about this either. Bad business models and bad business practices should fail and it would be counterproductive to artificially keep them alive by wasting taxpayer money to investigate and prosecute willing customers that are turned away en masse.
As for Spotify, I think they have a lot of potential. Their current service is quite good, and from a purely technical point of view, I find it impressive. The response time is superb. The sound quality is good enough for my uses.
However, there are a few things that I miss. For instance, I would love to be able to buy tracks or albums for download through Spotify. When I walk home from work I might want to listen to content that I've found on Spotify. Right now, the only way I can download the tracks I am listening to is to turn to iTunes, Amazon or some other service where you can buy music.
Also, there is potential for a social networking component to Spotify. The potential in sharing of playliststs has not been taken as far as it could go. I also think that Spotify could learn from other services (like flickr) when it comes to building communities -- a lot of the people I have listed as contacts on flickr aren't people I know personally. They are people that I share some interest with.
Spotify has a lot of un-tapped potential. I hope the founders realize this and are able to act on it before time runs out.
I also hope that some day the organizations that manage rights to content will start to live in the present and not be so hell bent on perpetuating practices that have long since stopped making sense.