Europe’s Spotify, the music sharing/listening/buying service that apparently wows everyone who tries it, looks unlikely to resolve licensing agreements with major US labels in time to meet the 2010 launch deadline set by CEO Daniel Ek. Beyond disappointing US consumers who’ve been teased with the prospect of the service finally becoming available in their market, some speculate that failing to meet their self-imposed deadline of a 2010 launch will damage Spotify’s credibility and negatively affect the enthusiasm of the US audience.
Says CNET: “What Spotify risks by missing its own deadline is credibility. By failing to make good on its promises to enter the U.S. market, the company is killing the anticipation and fan excitement. More importantly, the opportunity for ad-supported music services appears to be fading.”
In the same article, CNET breaks down some of the issues facing Spotify as they seek to close licensing deals with the labels:
• Money: The two sides can’t agree on some basic financial questions.
• Conversion rates: This is the percentage of Spotify’s users that opt to move from the company’s free offering to the paid-subscription plan. Butcher said that Spotify has seen gains in conversion rates and now has more than 500,000 paying customers. TechCrunch pointed out yesterday that the company is expected to soon announce that it has surpassed 10 million users. That sounds like an impressive benchmark until you do the math. The percentage of paying customers to the total number of users is somewhere around 5 percent. Music industry sources say Spotify’s actual conversion rate is closer to 7 percent. That’s still too low for the labels. They want conversions to be somewhere in the 15 percent to 20 percent range.
• Google Music: The top four labels have long sought someone to challenge iTunes. Apple sits atop digital music sales unfettered by any significant competition. But Google is working on plans to do just that, according to multiple music executives. They say that Google has spoken to the record companies about downloads, streaming music, and integrating Google Music into Android as well as the company’s juggernaut search engine. When compared to Google’s ambitious proposals, importing Spotify, with its modest revenue, isn’t as big a priority to some at the labels.