Unless you've been living under a rock somewhere, then no doubt you will have discovered Spotify.  I came across it a few months back and since then I find that I rarely bother with iTunes anymore.

Spotify seems almost too good to be true - thousands and thousands of free music tracks! Or is it?

I've just finished reading an excellent article on El Reg, "The Great Spotify Mystery".  Here's some of the highlights:

• Major labels own 30%+ of Spotify through equity investments. Most of that money is simply being recycled in royalties.
• Spotify's business model basically consists for selling user data and listening stats back to the record companies.
• Most users are 30-50 year olds, and are using it for rediscovering music.
• 35% of playlists are whole albums
• Spotify has spent a total of £5000 on marketing

It seems to me that Spotify represents the the last gasps for air by the old Majors Labels as they drown in an ocean of free music.

[Read more via The Register]

If you were offered the following, which would you choose?

1. Download album £7.99
2. Physical album £14.99
3. Download and physical album £14.99

In a recent study it was found that most people would choose the 3rd option. However when the study is repeated with just options 1 and 3, then most people would instead go for option 1.

This is because option 2 is a psychological decoy. It gives the impression that option 3 represents the best value for money, even though it is more expensive than option 1. Pretty smart hey?

It's Marketing 101, however it's a strategy that the music industry hasn't seemed to have caught onto just yet.

[via MillionMedia]