In the last few weeks we have seen Spotify gets a lot of headlines. While some claim their business model just can’t scale, others still wait for their delayed US launch. In this post I will try to give a review of the current state of the Spotify app and compare it to the rest of the choices in the market.

Let me just start and say that I’m a huge music enthusiastic. In recent years I’ve paid and tried almost every music service out there, including Yahoo Music Premium, Rhapsody, Zune and currently Spotify Premium. I have an original Zune, Zune HD, iPhone and I even had one of the original Creative Nomad players.

So… let’s start:

When reading about Spotify across the web you will mostly read about two things: Their attempt to force the record labels for a free ad supported model and their sleek user experience. Let’s start with the app itself.
While the look and feel of the application is sleek and resemble the iTunes look, I was actually very disappointed from it. It lacks big time in discovery of new music and artists.
For example: While you can see a list of top artists or albums, you can’t see such a list for each music genre.  Comparing the existing top lists with the parallel list of the Microsoft Zune Marketplace also shows a big difference. While in Spotify,most of the albums are popular but old albums from the last few years, on Zune it’s much easier to be exposed to new and up rising music. Basically it seems that the preferred way to explore music in Spotify is by searching a specific artist that you already know.

But the biggest problem of the Spotify app is how it handles your chosen music. Instead of going with the regular concept of “My Albums, Songs, Artists, Playlists” Spotify has a single concept of Playlists. If you want to download (on Spotify Premium) or save an album you must save it as a new playlist.

But of course the main thing to look at in any music application is the quality of its music library. When comparing Spotify music library to the one offered by the Zune or Rhapsody it’s hard to declare on a one winner. If you are into electronic music you definitely want to go with Spotify. maybe because their origins in Europe, the electronic selection is much better and includes many of the new albums out there. At the same time Spotify does miss some new and hot albums you can find in other subscription music services. For example: you won’t find there the new top chart album by Lady Antebellum – Need You Now.

So if the application itself still has much work ahead of it, what about the business model?
Here Spotify definitely shines way above its competitors. If you are looking for an offline, subscription music service, I would say that the Zune MArketplace can give Spotify a fight for its money (and also has the definite best music application Iv’e seen). But the strength of Spotify comes with it’s free service.
Spotify managed to do what no one did before – convince the record labels to put most of their new and best music in a free ad supported service. Basically, you can listen to whatever you want (in streaming – meaning you got to be online) and in return Spotify will put an ad (about 30 seconds) every three or four songs. What Spotify is trying to do is copy the old model of the radio.
Yes. There are many free services out there like Last.fm and iLike, but none has such a big music library and so much new and hot albums. And with the spread of free wifi and 3G networks, the need for offline access is getting smaller and smaller.

Bottom line – Spotify has tremendous promise and if they can convince the labels to the same terms also in the US, they might really be the next big thing. That said, they still need to do much work on their application in order to really be better than the rest of the competition.