Many in the entertainment and music industry are missing the point of the Spotify campaign,  #freeyourmusic. Spotify is not just opening its service to non-paying listeners, it’s trying to change the conversation from HOW you get your music to WHAT you listen on.

So far, we’ve all been focused on answering the question HOW to get music. Meaning… where do I go to get music, regardless of what device I’m using. To date the formidable options have been: 1) iTunes & Google Music: pay per song, control exactly what you listen to; 2) Pandaro & iTunes Radio: free listening with ads, someone else determines what you listen to (shuffle of sorts, based on your interests) and 3) Spotify: pay $9.99/month and you decide what you listen to and when (no ads).

With the recent announcement, from Spotify’s standpoint: tablet = computer != mobile device. In essence, everything you can do with Spotify on your desktop, you can now do on your tablet (iPad, Nexus) for free. Spotify is now #freefortablets (which would have been a more accurate explanation of their offering). If you mostly listen to music on your mobile device (iPhone, Galaxy) or on a tablet that is WiFi only, this announcement is not going to help you. If you listen mostly on your mobile device, what you will get is Internet radio, similar to Pandora and iTunes Radio (with ads). Here’s our take:

1. This market is segmented into two groups: those who are willing to pay and those who are not. #freeyourmusic is focused on those who are not willing to pay: more people listening = more ad revenue. For paid subscribers ($120/year), nothing changes. However, we do note that, depending on consumption, ad revenue from a single listener may be > than revenue from a single paid subscription.

2. Consumers want their content available on all their devices, all the time (i.e. bookmarks). Will people want to use Spotify on their tablet/computer and a different service, with potentially different offerings/selections on their mobile device? That’s pretty much what Spotify is suggesting, unless of course you pay up, which takes u back to #1.

Personally, I cannot listen to ads. I don’t like them in my apps and I definitely don’t want them in my music. The good news? Competition is heating up in this space. Beats Music, coming in January, appears to be focused more on WHO is picking the music, which alludes to a shuffle-type approach, along the lines of Pandora; whereas, a paid, unlimited listening subscription with no ads would put it in direct competition with Spotify. For now I’ll continue to pay my $9.99/month for Spotify and wait to see what Beats Music brings to the table. Indeed, competition is a great thing!