Wednesday 24 November 2010, 13:15 | By CMU Editorial
Spotify might launch in US without all the majors on board
Spotify may launch in the US without all four major record companies on board, sources have told the Financial Times.
As much previously reported, the European streaming service’s launch Stateside has been repeatedly delayed as the company struggles to secure licensing deals with the US divisions of Sony, EMI, Warner and Universal that match its arrangements with said companies over here. It’s widely assumed the problems lie with the free ad-funded version of the Spotify service rather than the premium subscription model.
Spotify’s difficulties in the US are in part down to timing. When the Swedish company first arrived looking for licences in the European markets the majors were all convinced ad-funded platforms were the future. But excitement over the potential of advertising revenues has waned somewhat in the subsequent three years. So, while Warner Music in Europe have just renewed their Spotify deal, it’s less certain they’d have signed up had the streaming service been seeking that deal for the first time in 2010.
The other issue is that the subscription model for digital music has gained more traction in the American market than over here, and some label execs fear the arrival of a free Spotify could destroy those other subscription services. Plus outfits like Pandora, which offers streaming music but with much less functionality than Spotify, are starting to become viable businesses and likewise could be screwed if free Spot was to launch in the States.
Which is why Spotify’s American launch has been postponed so many times, as the majors over there remain hesitant of the streaming service’s approach. Many have assumed that, with investors putting the pressure on for a US launch this side of Christmas, Spotify bosses might have to forego the free part of their business model and enter the American market solely as a premium pay to use service. But now there is gossip that the streaming platform might be willing to launch in America with only some of the majors on board.
Which majors are most likely to say yes isn’t clear. There were rumours some very large upfront payments were being offered to get the big boys on board, and at least half the majors could really do with a cash boost just now. And we know Warner boss Edgar Bronfmann Jr has softened his line on free Spotify in the US, which he once said was a definite no no. Certainly, if Spot does get to go live in America this year, it will be interesting to see who’s on board.