Spotify US plans under threat as labels demand cash up-front

Jan 5, 2011
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Spotify US plans under threat as labels demand cash up-front

Spotify's US debut looks less and less likely, with further leaks suggesting that record label caution and demands for "extremely high cash advances" have forced the streaming music service to reconsider whether a launch outside of Europe is possible. According to the Telegraph's sources, labels have expressed concerns that too many US users would opt for Spotify's "freemium", ad-supported package, rather than paying for ad-free, premium access.

"The US divisions of the major record labels, [Universal Music, EMI Music, Warner Music and Sony Music] do not feel comfortable with the freemium model and have demanded extremely high cash advances, which has caused Spotify to stop and think about whether it can afford the move to the US and indeed whether it is worth it….The labels in the US are worried about too many people becoming heavy users of the free component Spotify will offer, which is why they want high minimum guarantees. Spotify is now looking for additional funding to facilitate the labels’ demands" Senior music executive

Last we heard, Spotify had failed to ink a single deal with a major US label, despite having been in negotiations for a year. The company is now tipped to be exploring further funding options, but with it approaching profitability in Europe within the next nine months, analysts are predicting that it will decide not to rock the boat and abandon US expansion plans.


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