Since its beta launch at the end of last year the music streaming service Spotify has quickly become a bit of a "fans" favourite, offering a wide catalogue of music to its users to listen to for free with relatively little interference from advertising. With an interface that ingeniously 'borrows' (robs blind) from iTunes', it begs the question: is Spotify the future of music in the UK?

There seems to be growing evidence to suggest this could be the case - take a walk through the LBi offices in London and you are unlikely to have to move far to find someone inflicting their 'Friday mix' Spotify playlist on their colleagues. As Spotify focus on rapidly sourcing additional record labels and content for their library and growing their revenue streams through a variety of non / low invasive techniques they look set to become a major player in music distribution in the UK moving forward.

Obviously the real money comes from users actually paying for a service, but based on a recent presentation they gave at the LBi office in London it is clear that Spotify are not foolish enough to make these users the entire foundation of their business model, instead ensuring they also develop a robust ad platform that takes the advantages and disadvantages of the medium into account.

Brands are being encouraged to go beyond thinking about pure display / audio creative combinations and to actually utilise the product - creating associated playlists and advertising that links into "Spotifyed" branded landing pages and back out again, encouraging a certain level of engagement from the user that should actually enrich their experience.  Best of all they have engineered their ad delivery system so that free users are a) not bombarded with ads and b) only served ads when they will be seen and heard by their users. They do this by restricting adverts to times when a user is active in the Spotify application. Planner Buyers - I hear you breath a sigh of relieve, your buy will not be served to a user that is working on their spreadsheets - your ads will be seen!

The flip side of this is the premium part of the model and the ways the business plans to drive take-up for this.  This is where things gets interesting - rather than just getting rid of the ads, premium subscribers will shortly get access to an iPod touch, iPhone and smart phone application that will allow them to not only stream music wirelessly on their mobile device when they have access to wifi but also store music locally in the app to access when they are somewhere without wifi, for example on the tube on the way home from work.

I love the sound of this and I believe a lot of people will certainly take Spotify up on this offer BUT I can't help feeling that UK users are getting a poor deal compared to our friends over the pool. Microsoft's Zune Marketplace has given what is essentially the same functionality but in addition to being able to store music locally it allows you to download a number of tracks each month to keep, even after you end your subscription - plus you can wirelessly share tracks to a friend's Zune player for a limited number of plays so you can sell them on the wonders of whatever new track you have just found!

I guess to summarise: well done to Spotify for giving UK users a great service - this is something the music industry needs to monitor closely if it is to save its quickly diminishing revenues.  Ultimately the proof is in the pudding however... Will these innovative commercial models add up to enough to keep the music industry in the black?