Spotify music service targeting US push

By | March 26, 2010 at 5:19 PM

Spotify, a virtual digital jukebox and Europe’s largest legal online music site, aims to start U.S. operations in the third quarter of 2010.

The Stockholm-based company, which has 7 million users in Europe, is in talks with unnamed U.S. Internet and mobile-phone service providers about partnerships, Senior Vice President Paul Brown said in an interview yesterday. Spotify is also in discussions to start an application on Research In Motion Ltd.’s BlackBerry and Palm Inc smart phones, he said.

“We’re buying server space in random parts of the states and there are licensing discussions too,” Brown said, “but they are going fine because we’re in a long-term partnership with the labels and publishers.”

Digital sales of music accounted for 27 percent of revenue, or $4.2 billion, at the biggest record companies last year, according to the International Federation of the Phonographic Industry. Record companies are trying to curb piracy and illegal downloading by backing legal music sites such as Spotify, MySpace Music and MOG while urging governments to pass laws requiring Internet providers to penalize illegal downloaders.

The worldwide music market has shrunk 30 percent to $17.2 billion since 2004, according to IFPI.

Spotify, which has 325,000 users paying a monthly 9.99 pounds ($14.48) for the service ad-free, is partially owned by the biggest record labels. The site has had more than 10 million euros in ad turnover since starting in October 2008 and users are buying “tens of thousands” of tracks each week through a third party, Brown said.

In the U.S., Spotify would compete with online music services like MOG and Rhapsody. Spotify already has an application for its paying customers on Apple Inc.’s iPhone and the operating systems of Google Inc’s Android and Nokia Oyj’s Symbian, Brown said.

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