Spotify coming to U.S. 'soon,' but Warner Music deal still undone

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Spotify said it will expand its digital music platform to U.S. shores in the imminent future, confirming the long awaited move on its website Wednesday. "The award-winning music service that's taken Europe by storm will soon be landing on U.S. shores," the Spotify website states. "Millions of tracks ready to play instantly, on your computer and your phone. Any track, any time, anywhere. And it's free!"

Spotify

Digital music platform Spotify will soon be available in the U.S.

Spotify's expansion to U.S. shores is no surprise. Speaking last month at an Omnicon event in London, Spotify general manager of Europe and global vice president of ad sales Jonathan Forster said the company has secured the record label deals necessary to enter the American market. "We're signing the remaining deals as I speak," Forster added. In June, The Wall Street Journal reported that Spotify completed a distribution deal with Universal Music Group; the firm previously signed distribution pacts with major labels EMI Group and Sony Music Entertainment.

But citing industry sources, The Los Angeles Times reports Spotify still has not completed an agreement with the fourth major label, Warner Music Group, whose massive catalog touts records from acts including Led Zeppelin, Neil Young and The Flaming Lips. Further complicating the issue: Wednesday, Warner shareholders approved the company's proposed $3.3 billion sale to Access Industries Inc., the privately held industrial group founded by billionaire Len Blavatnik. Warner declined to comment.

Conventional wisdom has long stated that Spotify needed to secure content from at least three of the four major label catalogs to gain significant traction among American consumers. Still, the absence of the Warner catalog will make it far more challenging for Spotify to gain traction in the competitive U.S. digital market.

Spotify now boasts more than 10 million registered users across Europe. Insiders say American record labels have consistently pressured the firm to jettison its current free content approach in favor of a guaranteed revenue model, citing the impasse as the culprit behind Spotify's lengthy absence from the U.S. market. While about 85 percent of Spotify users in Western Europe tune in to the free, ad-supported version of the service, reports indicate that the major labels want Spotify to follow the lead of rivals like Rhapsody and eMusic by introducing premium monthly subscriptions to U.S. consumers, enabling the music industry to share in resulting revenues.

The premium Spotify service costs U.K. subscribers £9.99 per month (about $16 U.S.) and offers desktop and mobile access to unlimited, ad-free music. In April, Spotify instituted narrower limits on the amount of music available to users opting for the free version, a move to migrate consumers to the premium offering. The Wall Street Journal adds the step was also critical to convincing label partners to license their music for U.S. consumption. Spotify has not yet outlined the terms of its U.S. service plans.

For more:
- read this Los Angeles Times article

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