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Spotify: One step closer to the U.S.?

January 19, 2011 |  5:38 pm

Spotify_6_

Touted as a potential savior to the U.S. music business, the much-beloved European streaming service Spotify today took one step closer to launching in America. How big of a step, however, is not yet known. Already boasting more than 10 million users in seven European territories, Spotify's American invasion has been little more than hype dating back to late 2009.

Yet perhaps there's a light at the end of the tunnel.

The service has signed a distribution agreement with Sony Music Entertainment, according to those familiar with negotiations between Spotfy and the major labels. Yet there was no indication that that the Sony deal would lead to a flurry of additional announcements, and it was unknown whether talks with other labels were near an agreement.

It is still believed that Warner Music Group will continue to take a wait-and-see approach, as it has taken a very public stance against companies that offer free music streaming.

A spokesman for Sony said the company had no comment, and refused to confirm or deny that the deal was done. Spotify representatives could not be reached for comment.

Spotify's model is based on the "freeium" concept, in which users can listen to a set amount of music for free, but have to subscribe for added features. As 2010 was coming to a close, Spotify was said to have hit about 750,000 in paid users. 

Labels in the U.S. had previously expressed skepticism to The Times that Spotify could boosts sales or encourage a significant number of users to subscribe. Meanwhile, sales continue to decline for the music industry, and the availability of free songs on services such as YouTube and Pandora is showing no signs of slowing. 

Overall album sales, which mostly encompass traditional CDs,  continued to sink, as the industry suffered another double-digit drop in 2010. Total album sales were down 12.7% in 2010, matching the decline posted in 2009. Album sales in 2008 and 2007 were down 14% and 15%, respectively.

Sony is home to such artists as the Kings of Leon, Christina Aguilera, Susan Boyle, Bruce Sprinsteen, Avril Lavigne and "Glee," among many others.

-- Todd Martens

Photo courtesy Spotify

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