The popular Swedish music streaming service is to make its debut in the US today, having signed deals with all four of the major record labels: Sony Music, Universal, Warner and EMI. Last week Spotify began inviting Americans to submit their email address so that they could be notified when the service was available to sign up to.
The announcement said: “Spotify is coming to the US. The award-winning music service that’s taken Europe by storm will soon be landing on US shores. Millions of tracks ready to play instantly, on your computer and your phone.”
The 28-year-old Spotify’s co-founder and chief executive Daniel Ek has been repeatedly promising to launch Spotify in the US since 2009, but lengthy negotiations with record labels have meant a long wait for users.
The US product is very similar to the European product. Namely a free service supported by advertising and two premium tiers that let users listen without ads and on mobile devices. The free tier will let users listen to the company’s catalog of more than 15 million songs from a computer connection for six months.
After that, free users will be capped at 10 hours a month and up to five spins for any particular song. The issue of the length of free service was one of the main sticking points in negotiations with record labels as executives felt uncomfortable about giving away music for free with only advertising revenues to fall back on.
Spotify’s paid tiers include a plan for $4.99 a month that will let users listen without ads, and another for $9.99 a month that allows users to access music from a smart phone such as an iPhone, Android, Palm or Windows 7 device.
Mr. Ek said he was confident that there would be no delay, and that Americans would soon be able to experience what has made Spotify the world’s most celebrated new digital music service. He was right. By Wednesday afternoon, Spotify’s deal with Warner was signed, and on Thursday, as scheduled, it will become available in the United States.
“We’ve made it easier to listen, and we’ve made it easier for people to share,” Mr. Ek said. “Hence, people tend to get more into the experience, and they tend to find new music and build larger collections that they want to take with them. And therefore, they also pay more for music.”
Forrester’s outgoing research director Mark Mulligan is not convinced by streaming services’ sustainability. In his blog he said: “Streaming services as a whole just aren’t delivering enough income for artists. Spotify is much maligned for the raw deal it is perceived to give artists, yet when you look at the average-pay-per stream, Spotify actually pays out more than that darling of premium services Rhapsody, despite the majority of Spotify’s streams being advertising-supported rather than premium.”
Then he added: “The simple fact is that the disparity between paid downloads and streaming is unsustainable. It just isn’t tenable that 3 paid downloads from Amazon can still deliver 50% more revenue than all the streaming services combined over the same period and yet have less than 1% the activity level of those services.”
Sportify failed to launch in the US last year, because the major record labels demanded high cash advances. It is unknown if these demands were met, but cash flow is not a problem for the company following a recent $100m (£61m) funding round that values Spotify at $1bn.
Spotify has recently announced a partnership with Virgin Media which will see the music service integrated with Virgin Media’s TiVo set-top boxes and made available to mobile customers. It is also rumoured that the company is close to announcing a partnership with Facebook,which will be unveiled later this summer.[via The Telegraph and Los Angeles Times]