Spotify and Sony Come to a Musical Meeting of the Minds
posted Sunday Jan 23, 2011 by Nicholas DiMeo
Just last week I talked about Spotify, a European music service, making its way to the States. It appeared deals were very close to being finalized and now it has been announced that Sony has sealed a deal with Spotify.
Sony and Spotify have not commented on the deal, and this doesn't officially bring Spotify to the States until the terms of the deal are agreed upon, but sources have confirmed that Sony looks to have the service be similar to the one in Europe: Streaming music free for a limited amount of hours per month, with an option to pay for an ad-free version and the ability to stream it from a mobile device.
For full details on the deal, hit the break.
Sony, however, is just one piece of the puzzle. Spotify would need to snag another one or two music labels to jump on board with their idea, an issue that has plagued them since their initial attempts at crossing the pond years ago.
We've already talked about how Spotify would have to shell out millions of dollars up front to get these US fish to bite and that continues to be the issue that analysts say are holding them up from officially reeling in the US market. This compiled with other reasons lead analysts to think Spotify may not enter the market for some time. There is speculation that Spotify's free streaming service would cause more of a decline in CD sales, which still make up a big part of labels' incomes. To refute, Pandora and last.fm are also free. Industry sources are also concerned with the fact that labels have a good relationship with Apple and may not want to burn that bridge. It should be noted that labels currently have deals with other music-purchasing sites like Amazon, Rhapsody and yes, even Napster still.
Overall it seems that music industry heads are scared of more competition entering the market. In essence, while it may segment the userbase on who chooses what particular service, so long as record labels place all their music on all the services, the labels win by gaining exposure in as many places as possible.
Spotify seems like it's found a working business model overseas and I hope that it catches attention and a solid core of users when it finally makes its way over here. I know I will be sure to try out and use it, as it contains several different things from all of the popular music services.