Healthcare Crowdfunding Platform Watsi Grabs $1.2M From Tencent, Paul Graham, Vinod Khosla, Ron Conway And More

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At TechCrunch Disrupt NYC back in April, former Facebook exec-turned-venture capitalist, Chamath Palihapitiya delivered a deflating critique of the tech industry – in particular, the quality of its startups. Had he been issuing a report card, the Tech World would have gotten an “F,” with an extra side of “shame.” His frustration seemed to emanate principally from the fact that “Big Ideas” are few and far between in the industry today. Rather than aiming high, he intoned, entrepreneurs seem content to reach for low-hanging fruit despite the diminishing returns inherent to that approach.

While Big Ideas may not be at all-time high, today’s news brings some assurance that they are still alive and well in the tech industry – and that there’s even capital to support them, for-profit or not. Watsi, a Y Combinator-backed healthcare crowdfunding platform, is tackling one of the biggest: That more than one billion people can’t afford (or don’t have access to) adequate medical services. Even Chamath would likely agree that falls in the “Big Idea” camp.

Today, the non-profit crowdfunding platform announced that it has raised $1.2 million in what is its first round of financing, or “philanthropic seed round,” as the startup is calling it. Granted, if Watsi is setting its sights high, than $1.2 million will only be a drop in the bucket compared to the capital and resources it will need if it truly hopes to make a difference at scale.

A good start, to be sure, especially when considering the impressive roster of names contributing to its first financing, which includes institutional investors, like China’s largest Internet services portal, Tencent, Y Combinator partners – including personal investments from founder Paul Graham and YC Partner Geoff Ralston – along with the “godfather of angel investing” and owner of the most pristine coiffure in the Valley, Ron Conway, Sun Microsystems and Khosla Ventures co-founder, Vinod Khosla, venture philanthropy fund (and Kiva investor), The Draper Richards Kaplan Foundation and Flixter founder and Rotten Tomatoes CEO, Joe Greenstein – to name a few.

While the list is impressive, it’s not a group of investors one would typically find contributing to a non-profit fundraiser. Watsi founder Chase Adam explains that the reason the company opted for this approach is that the traditional mechanisms for non-profit fundraising sometimes act as a counterproductive force by undermining the social movements they’re trying to support. Instead of devoting themselves to their “Big Idea,” socially-minded entrepreneurs often spend their time entering online voting competitions and hosting banquets to raise money to support their operations.

Instead, Adams hopes that the collection of VC, angel and institutional donations represents a move toward a new future of non-profit fundraising. Granted, Watsi is in the unusual (and fortunate) position to have been the first non-profit startup to be accepted into Y Combinator and to have had the vocal support of Y Combinator’s founder, Paul Graham, who also recently accepted a seat on the startup’s board – the first time he’s done so for a YC incubation.

In reference to this question, Graham suggested to Watsi that they call this raise a “Series N” (non-profit and n=variable).

On the flip side, Adams tells us that he set a three-month deadline for fundraising, deciding to go after industry leaders and big names in the angel and venture world, regardless of whether or not the efforts proved to be successful. By doing so, the Watsi founder hopes that this might help encourage other social businesses to consider forgoing traditional sources of fundraising.

Ben Rattray, the founder and CEO of social action platform Change.org and I recently spoke on this very subject after the socially-minded for-profit company closed its own $15 million round of funding. As a for-profit business, there’s more pressure for Change.org to raise institutional or venture capital.

As a non-profit, Watsi would likely be more attractive to investors, whereas Big Idea-based, for-profit companies have traditionally found it difficult to raise money from these types of investors. However, both Adams and Rattray share similar goals, as the Change.org founder that would enable them to remain independent without having to constantly be looking for a one-time liquidity event.

“These kind of social enterprise businesses are working over the long-term, 15 to 20 year windows, which is beyond the scope of most venture capitalists,” Rattray said at the time. However, he believes that it’s going to change: “I have no doubt this is going to change – that eventually more investors are going to start backing socially-conscious businesses,” Rattray says. And it’s for that very reason that I think the juxtaposition of Watsi and Change.org is worthwhile. Although perhaps idealistic – and, admittedly, Watsi is a non-profit, perhaps the startup’s funding is the first sign that it is, in fact, beginning to change.

Nonetheless, for Watsi, this raise is an important validation of its own ambitious, “Big Idea” goals. Of course, eliminating poverty or fixing global healthcare and covering the uncovered, don’t happen over night and aren’t solved by one person or one founder. That’s why Watsi is leveraging the “many hands” approach of crowdfunding to let anyone contribute to the funding of low-cost, high-impact medical treatments for those in need.

Furthermore, the platform automatically creates profiles for those in search of financial support for treatments or surgeries and makes it easy to make direct donations. Furthermore, these profiles, besides providing critical transparency into how your donation will be used and actually help someone, it also works towards attaching actual, human faces to global poverty – which sounds cheesy but is critical to conditions or problems like this that are so huge that providing real faces, one-by-one, can help discourage, say, just ignoring it and hanging for a lower-hanging fruit.

To further incentivize donations, Watsi offers 100 percent of the donations it collects from the crowd to those in need. Graham also says that the startup is paying “all their operational costs from their own funding, and none from your donations,” and in turn, even stomach credit card processing fees. A noble gesture in its own right.

The startup hosts the profiles of people in need but who can’t afford them, allowing donors to peruse profiles, donate as little as $5
, Watsi hosts profiles of people in dire need of medical care, but who can’t afford it. Donors can browse the profiles and donate as little as $5 to help someone get well. 100% of donations go to the sick, and Watsi funds its operations and even pays credit card processing fees on donations out of its own pocket. We name

Zynga’s New CEO Don Mattrick Says It Won’t Be Quick Or Easy To Get The Company Back On Track

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Don Mattrick, the new Zynga CEO announced at the beginning of the month, offered his initial on-the-job observations today during the conference call discussing the company’s second-quarter earnings.

Mattrick (on the right of the photo with Zynga founder and former CEO Mark Pincus) started out by offering some positive commentary, saying that the company “caught lightning in a bottle” and “achieved in only a few years what most companies took a decade or more to do.” However, he acknowledged, “We’re missing out on platform growth that Apple, Google, and Facebook are seeing. In short, we can do better.”

So how is he going to try to turn things around? He said he’s going to be working with the company’s leadership to “challenge previous assumptions” and to focus on “business fundamentals – which, candidly, we’ve struggled with over the past year.” Mattrick predicted that there will be two to four more quarters of volatility as the company tries to find a new direction.

“Getting a business back on track isn’t easy and isn’t quick,” he said.

Pincus, now Zynga’s chief product officer, was also on the call, and among other things, he said he was impressed that Mattrick set up his desk in the middle of the Farmville studios. Both Pincus and Mattrick described their relationship as one between “partners”.

Mattrick said he’s also going to discuss his priorities on this call – I’ll update this post when he does.

Update: Later in the call, Mattrick said his priorities for his first 90 days on the job include “getting under the hood” to evaluate the business, identifying the real market opportunities, improving product quality, looking at how people are deployed across the company, and reassessing the product pipeline. He also suggested Zynga is a young company that has “the ability to break some bad habits” but that while he’ll be in listen-and-learn mode initially, “When it becomes clear what change is necessary, I’ll move quickly and decisively to do what’s in the best long-term interests of our players, our employees, and our shareholders.”

He concluded, “There are some good winds at our back, and my job is to get our sails up and Zynga pointed in the right direction.”

Prim Does Your Laundry. Pickup, Wash, Fold, Delivery, Awesome

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You can call it a first-world problem. Or you can say it distracts people from their passions and contributions to the world. Either way, laundry is a chore, and new Y Combinator startup Prim wants to do it for you. You can schedule Prim online to come to your place, pick up your laundry, have it washed and folded at a top-notch laundromat, and deliver it back to you. $25 for a bag. It’s that easy.

Prim’s Stanford-educated founders originally came into Y Combinator to build an in-video advertising platform, but the business wasn’t there. The idea for Prim was scattered all over their floors. See, co-founder Yin Yin Wu’s boyfriend worked at Facebook, where they have free laundry service. His clothes ended up neatly washed, folded, and in his drawers rather than in heaps waiting to be done. That meant he could focus on his job and life. Yin Yin thought, “why couldn’t this service be available to anyone?” So they created Prim.

Uber For Laundry

Currently Prim operates in San Francisco, Mountain View, Palo Alto, and Menlo Park – home to the world’s busiest techies. You go online and select from their upcoming 9am-11am or 8pm-10pm pickup and drop-off windows. You throw your clothes in a garbage bag and wait for Prim’s text that it’ll be there in 15 minutes. The driver calls when they arrive. You can hand them the bag, leave it with your doorman, or if you’re comfortable, give them a copy of your key or send a photo of it and they’ll make a copy so they can just come into your place and grab the bag.

Their driver takes the sack of clothes to be tagged and brings it to a well-rated local laundromat with a track record of flawless jobs. Within two days you get notified to confirm your delivery, and Prim brings the washed and folded clothes back in high-quality nylon satchels. It even ties together your stacks of shirts or whatever you wouldn’t want wrinkled so they stay prim and proper. See! That’s where they got the name! You got that already? Sorry.

The cost is $25 for the first bag of each pickup and $15 for the additional ones. That’s a bit more expensive than you can expect from a laundromat’s wash and fold, but you get the pick-up and delivery included. Because Prim brings in so much business, it gets discounts from the laundromats so the price stays reasonable. Prim strives for perfection, but in case anything gets lost or damaged, Wu says Prim has insurance and will refund you 100% of the cost of your clothes. “If there’s any mistake, we try to bend over backwards for our customers” says Wu.

The idea is that as Prim gets bigger, it can use economies of scale to improve its margins and lower its costs. While it’s only in the Bay Area now, expansion plans don’t include the sprawl of LA (where Wash.io operates) or fighting the specialized competitors in NYC. Instead it’s looking at Seattle, Boston, and other dense cities full of time-strapped knowledge workers. In SF, Prim will have to battle LaundryLocker where you drop your clothes in a public locker, and delivery services like Sfwash (where you pay by the pound), Sudzee (which requires special lockable bags), and some other local services.

Prim differentiates through simplicity and its flat rate. The risk is that the price is too high and it can’t get traction, or too low that it can’t squeak out a profit. Getting the balance right and giving people a great experience will make or break the startup.

Luckily, I loved Prim. It got my laundry done in 24 hours, everything came back clean, dry, soft, unwrinkled, and nothing seemed shrunk. Oh, and I did basically zero work. No dragging my clothes to the laundromat, fiddling with change for the machines, and most importantly, no waiting for hours. Even if you have machines in your home or apartment, doing loads one at a time can be quite annoying. My laundry often languishes because I dread the rigamarole. With Prim, I’m a lot less likely to make it to the bottom of my sock drawer. A more flexible morning pickup schedule would help, but Prim says they’ll always work with customers to find some time that works. Adding in dry cleaning would also be a big plus, and help them compete with other services that handle all your clothes-washing needs.

Wash And Flow

No, Prim isn’t going to save anyone’s life, but it could still help improve the world if you think about it. Convenience doesn’t just breed laziness. It can enable productivity. In that way, I’d say Prim shares DNA with Dropbox and Asana, not just Uber and TaskRabbit.

Prim lets you concentrate on what you love to do, what you’re responsible for, or how you contribute to the universe. I’m decent at writing, terrible at laundry, and busy. Spending a ton of time washing and folding is just inefficient for me. I feel better stimulating the economy and letting someone good at laundry do their thing. And imagine how this could free up a CEO, doctor, charity director, or parent to take on the duties only they can fulfill?

Think how long it takes you to do laundry. If that amount of your time is worth more than $25 (or $40 if you’ve got a big wardrobe), use Prim.

And use Prim with the promo code “techcrunch” to get $10 off your first pickup.

Prim Co-Founders (From Left): Xuwen Cao and Yin Yin Wu

Comcast and Verizon Decide They Don’t Need to Compete With Apple, Google and Everyone Else, After All

never mind

Last year, when Verizon Wireless and Comcast were trying to get lawmakers to sign off on a giant wireless spectrum sale/noncompete pact, the two companies also said they were going to create a technology/R&D joint venture. It was supposed to come up with really cool tech products that consumers would love.

That JV is now dead. Verizon announced its demise today during the company’s earnings call, but said the partnership actually ended in late August.

The news here is that the most important part of the Comcast/Verizon deal hasn’t changed. Verizon still owns valuable spectrum it purchased from Comcast, and the two companies are still agreeing not to compete – or at least not to compete very vigorously.

It’s not surprising that Comcast and Verizon have concluded that their JV didn’t make sense. Most JVs don’t. And if there is an example of two companies at the scale of Comcast and Verizon successfully working together to create cool consumer tech, I’d love to hear about it.

For the record, though, the two companies didn’t seem to have those doubts back in March 2012. Back then, when the companies were still trying to get federal approval for the deal, they were pointing to the JV as a big win for consumers.

Here’s what Comcast executive vice president David Cohen told a Senate subcommittee back then:

“By enhancing the Cable Companies’ and Verizon Wireless’s own products and services, the Joint Venture will compete with similar solutions that AT&T, Dish Network, Google, Apple, Microsoft, and others already have introduced into the marketplace. This, in turn, will spur other companies to respond, perpetuating a cycle of competitive investment and innovation.”

And here’s what Verizon is saying, via a spokesperson, today:

“The joint venture was formed to bring innovation to the marketplace and enhance the customer experience through technology that integrated wireline and wireless products and services. Evolving technology and market changes since the joint venture was formed have led all parties to conclude that a joint venture, per se, is no longer needed to deliver innovative services to customers. Verizon Wireless and the cable companies will continue to explore ways to collaborate on technology in the future. Each company remains committed to bringing innovation to its customers and will continue to find ways to optimize the user experience for each company’s products.”

If you’re a skeptical person, you might think that Comcast and Verizon were overselling the benefits of the JV from the start. You might think that they never really thought they could successfully compete with the likes of Apple and Google, but were holding out the idea because consumer groups were unhappy with the other parts of their pact, which seemed likely to reduce competition between the two companies.

On the other hand, both Comcast and Verizon did assign people to work on this stuff together, and they did do some work. Comcast, for instance, points to the Xfinity TV Player app, which lets you download movies and TV shows to your iPad and iPhone and take them with you, as an example of the joint venture’s output. [Update: Strike that. A Comcast rep tells us we had bad information: The app was made in-house, not via the JV.]

So, if you were a different kind of skeptical person, you might think that Comcast and Verizon really did think they could successfully compete with the likes of Apple and Google. And the fact that it only took them 17 months to realize they were wrong – and pull the plug – is a good thing.

(Image courtesy of Shutterstock/Carlos Caetano)

Darth Vader and the “Clockwork Orange” Guy Do Facebook Updates (Video)

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While you kind of feel badly for them, James Earl Jones and Malcolm McDowell manage to still look classy in the new Sprint commercials, in which they emote on a phone call and, in another, on Facebook updates for someone named Jenna.

“I think I see you. Nope, wasn’t you,” booms Jones, who has most memorably been the voice of Darth Vader in the “Star Wars” films, among other big roles.

“Now, I’m by the tools … now, I’m by the linens,” responds McDowell, who once starred as Alex in the movie classic, “A Clockwork Orange.”

Ah, well:

Twitter’s Mobile Apps Begin to Look a Bit More Like Instagram

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Continuing its trudge toward becoming a more media-centric service, Twitter on Tuesday announced a new version of its iOS and Android mobile applications, giving more prominence to photos and video in the stream.

Instead of needing to click through to see an attached photo in your Twitter timeline, now users will see previews of pictures and videos captured with Vine within the stream as they thumb through it.

It’s a simple yet logical move for the microblogging service, which until now has primarily been relied upon for text-based updates in real-time. With the rise of Instagram over the past few years, users have flocked to more visual platforms, preferring to thumb through images and videos.

The move comes as Twitter aims to broaden its appeal to users, only weeks before the company makes its public debut on the New York Stock Exchange. While practically ingrained into the mainstream media consciousness, Twitter’s user growth rate has slowed year over year; the company is home to around 230 million monthly active users, far short of Facebook’s billion-plus member network.

Not to mention the obvious appeal to advertisers, which will receive more prominent billing in the Twitter feed when including pictures and Vine videos within their tweets. (Digiday’s take on this is good.)

Facebook’s acquisition of Instagram did not help matters for Twitter. The microblogging network was in fierce competition with Facebook to acquire Instagram just a few years ago, but lost out to a last-minute billion-dollar offer directly from CEO Mark Zuckerberg.

As a result, Instagram later rescinded the ability to preview its photos from within the Twitter stream, requiring users to click an extra link in order to reach the Instagram shots. Not only was it annoying for users, it was a blow to Twitter, which lost a great deal of rich visual content.

Shortly after Twitter received the heads-up late last year that Instagram would cut off its integration, the company scrambled to figure out a solution to bringing filters into the Twitter app itself, according to sources familiar with the matter. To do that, Twitter contracted the services of Aviary, an outside company responsible for much of Twitter’s photo filter product.

Twitter certainly learned from the whole situation. What you won’t see are previews of photos uploaded from nonTwitter products; only photos uploaded via Twitter’s apps and services will show up in preview form. Same goes for Vine videos (but not for YouTube videos). No word on whether that will change in the future.

Expect the download to roll out for Android and iPhones on Tuesday.

About Those Google+ User Numbers …

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Since its inception, it has been tough to tell just how well Google’s social network, Google+, is doing. Every time Google+ releases a new set of user number statistics, their accuracy and methods are almost immediately called into question.

According to information released on Thursday, it seems that skepticism was well warranted.

Take Amir Efrati’s Thursday morning story on Google+, which called into question the 300 million active, “in the stream” user visits Google+ recently claimed it received each month.

As Efrati wrote, citing anonymous sources, and Google confirmed to AllThingsD, the “stream” is more broadly defined than one would think. It also means clicking on the little red bell or share icons you see across all of Google’s properties.

Quoth Google, in a statement to AllThingsD:

“Yes, clicking on the notifications bell does count in our monthly actives metric for the Stream. If you click anywhere which leads to the Stream being loaded and displayed, we count you as viewing the Stream. The Stream is rendered on mobile (Android and iOS), on the Web at plus.google.com, and when you click and open a notification view of the Stream on desktop properties.”

To be fair to Google+, yes, you can still reach and use Google+ from all other Google sites. Click the bell when you’re in your Gmail account screen and you’ll indeed be presented with a small, stream-like view of Google+ content. It’s possible that people are sharing from there.

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And what’s more, competitors like Facebook also define monthly active users fairly broadly. The numbers include people who use third-party website widgets to share – the “Like” or “tweet” buttons you’ll see on sites like ours, for instance.

The problem is, as Google presents it, we can’t tell if users actually intend to use and share on Google+, or if they’re just clicking on the notifications bell to get rid of it – glaring red and bright against the plain white and gray background of Google’s properties.

So this leaves us, the critics and skeptics, back at a bit of a loss. Perhaps there are a significant number of people actively using and sharing on Google+ from other Google-owned sites.

Or perhaps it’s as dead as lots of people like to joke it is.

We just don’t know. And until Google decides to break down specifically how and from where people are visiting “the stream,” I doubt we’ll ever really have a notion of the network’s health.

Could Google or Tencent Beat Facebook to Buying Snapchat?

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Right now, Snapchat is having its “belle of the ball” moment.

The mobile messaging service – which lets users exchange photos and video that disappear after a few seconds – is being courted by Facebook. It has long been an app that CEO Mark Zuckerberg lusted after.

Thursday afternoon brought another turn of the screw. Valleywag reported that Google could also possibly be considering taking a run at Snapchat, matching Facebook’s $3 billion to $3.5 billion offer. Google and Facebook aren’t commenting, but sources said that Google has indeed expressed some interest in a deal. Tencent, the Chinese consumer Internet company, has also been eyeballing the company, according to sources.

I don’t know Snapchat’s fate, and from what I’ve been told, Snapchat CEO Evan Spiegel himself is unsure of it. But it got me thinking – whether they’re in the running or not, which companies are most likely to go after the fast-growing Snapchat?

Let’s go down the list.

Facebook:
Zuckerberg wants Snapchat bad. So bad, in fact, that he tried – and failed – to clone the app outright. Sources familiar with the matter have described the Facebook CEO as “obsessed” with Snapchat and the idea of ephemeral messaging. They told AllThingsD that he has made multiple offers to acquire the company, some for more than the $1 billion he paid for Instagram last year.

Likelihood: Very High

Google:
Google may have Google+, but it knows it can’t hold a candle to Facebook or even Twitter when it comes to social mobile apps. Buying Snapchat could give Google immediate overnight relevance in social, while simultaneously dealing a blow to Facebook. Not to mention that $3 billion is a pittance for the highly profitable company to spend on an acquisition.

Likelihood: High

Tencent:
This is a good fit. Spiegel has described Tencent as a “role model” for Snapchat in terms of revenue models – potentially alluding to in-app purchasing possibilities for the startup.

And Tencent is indeed interested – if not in a full acquisition, then at the very least in a large strategic investment.

Likelihood: Very High

Yahoo:
A dark horse, and at this point not an entrant as far as I’ve heard. Still, CEO Marissa Mayer has the cash to make the deal, and is no stranger to acquisitions. Plus, an acquisition of Snapchat could help to both bolster Yahoo’s mobile efforts – which are lacking – and burnish its less-than-cool image – sort of like buying Tumblr did.

Still, there’s no evidence to my knowledge that Yahoo has approached Spiegel or Snapchat about a potential acquisition.

Likelihood: Unlikely

Twitter:
After long considering killing off its direct-messaging feature entirely, Twitter woke up last year and figured out that people actually love sending private messages. Another satellite app acquisition – similar to the one it did with Vine – could make sense.

Problem is, the figures being thrown around for Snapchat now are way out of Twitter’s price range. They’re nearly double the amount the company just raised in its initial public offering. At this point, Snapchat is far too rich for Twitter’s blood.

Likelihood: Not at all likely

A caveat to many of the past week’s stories on this topic: It’s possible – if not likely – that the escalating prices and number of companies involved is largely due to jockeying from Snapchat insiders who stand to make hundreds of millions on the deal. Read each new report with that in mind.

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Another thing to remember: Spiegel intends to raise yet another round of funding for his company at a hefty valuation. If another round goes through, there will likely be a secondary component to it, in which Spiegel and co-founder Bobby Murphy could sell some of their own shares and cash out. That means the two could still continue to go for broke and build out their own company rather than sell to the highest bidder, while having the insurance of already having taken some money off the table. And according to multiple people close to Snapchat, Spiegel and Murphy very much want to build out the startup into a full-fledged company.

Bottom line: If Snapchat keeps growing – and sources said that is indeed the case – Spiegel isn’t under the gun to make a decision today. If all goes well, his acquisition offers – and the high prices they command – likely won’t disappear.

Spotify Will Launch Limited Free Mobile Access At Dec 11th Event, Source Confirms

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Spotify plans to make mobile access to its music service free, The Wall Street Journal reports. Now a source confirms with TechCrunch that the free mobile tier will launch December 11th at a press event in New York. We’ve also learned users won’t get unlimited on-demand access, but will be less restricted if they listen to playlists or collections they’ve previously created.

Spotify sent out invites for the December 11th event on December 3rd, but didn’t say what would be launched. It simply noted “We’re having a media event. Like to come? There will be donuts.” But now we’ve confirmed that unveiling limited free mobile access is a big part of the show.

Until now, Spotify has only allowed premium subscribers paying $10 a month to stream music from mobile devices. Free, ad-supported access was available on desktop and laptop computers, and for $5 a month users could remove the ads from those devices but not listen on mobile.

But those rules were put in place years ago when smartphone penetration was lower, high-speed wireless networks were less common, and there were fewer competitors. Now the world is going mobile, and shutting users out of listening on the go unless they pay over $100 a year seems restrictive. It could also endanger Spotify’s ability to grow its paying subscriber base beyond the six million customers it has today (out of 20 million total users).

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Presumably, the idea before was that you’d get a taste of Spotify for free on the web, and that would tempt you to buy mobile access. However, now many people hardly use traditional computers, especially in developing markets where people never owned them and skipped straight to mobile. With no way to try out Spotify on mobile, the company had no way to upsell them to paid plans.

Meanwhile, Spotify’s advertising infrastructure has matured over the year. It may be able to more efficiently sell its audio ads, making them a more viable way of earning money or at least breaking even from ad-supported listeners. That means it may be more cost-effective to support free mobile users now than before.

Finally, the last year has seen Google launch a streaming music service while Apple launched iTunes Radio. It still faces competition from startups like Rdio, Slacker, and Deezer. And new music streaming services from Beats and YouTube are slated for next year, making music a crowded market. Spotify can’t risk going into the new year without a free mobile option.

As for how that option will work, The Wall Street Journal’s Hannah Karp reports Spotify has spent a year quibbling with major record labels Sony, Universal, and Warner about how much control free users would get over what they listen to on mobile. The WSJ says Spotify has successfully struck a deal with the labels but users will only be able to play a limited number of songs on demand. After that, it says they’ll be restricted to listening to Spotify’s Pandora-like radio service that’s based on their tastes and input.

A source gave TechCrunch more details on the restrictions, saying that users may have more freedom to listen to their previously compiled playlists or starred collection of songs. The reasoning may be that Spotify sees these subsequent plays of songs users have already shown interest in as less valuable than on-demand access to what they’ve never listened to before. Reserving infinite search-and-listen capabilities for premium customers ensures people don’t get the milk if they don’t buy the cow.

When the free tier launches, these limits may not be especially easy to understand, our source says. That could confuse users, leading to poor user experiences where people think they should be able to listen to something but they can’t. They’ll blame Spotify, but sadly, they should really be blaming the labels, as they’re the ones too stingy to realize a simple user experience creates the delight that keeps users coming back, and maybe even opening their wallets.

We’ll be at the December 11th event covering exactly how things shake out.