Waiting for Spotify to launch in the United States is the new waiting for the Beatles to appear in iTunes.
I tweeted that back in February, and still, we’re waiting for Spotify, which has been available in Europe for two and a half years now, to launch in the States. Why are Americans still locked out of the candy store?
We heard an interesting theory the other day from a well-connected source: Record labels accustomed to receiving big checks from Apple want to give Steve Jobs and company a crack at offering a music subscription service to Americans before Spotify enters the ring, so they’ve been dragging their feet (i.e. demanding too-high payments) in their negotiations with Spotify, preventing it from launching here until after Apple’s cloud music service does.
Spotify has reportedly inked deals with Sony Music and EMI for its still-rumored U.S. launch already, leaving Universal Music Group and Warner Music Group as the remaining holdouts (not to mention the indies Spotify has licensed for Europe, which would presumably fall in line as well). These labels have been in talks with Spotify for years, having already licensed the service in Europe, with no stateside progress to show for it — even as Spotify have added new, label-friendly limits to its free version.
If this hunch is correct, they won’t allow Spotify to launch here until Apple’s music service is live, which could happen as soon as June 6th at the company’s WorldWide Developers Conference in San Francisco.
This theory seems a bit cloak-and-dagger on the surface, but it makes sense. Apple became the biggest music retailer in the United States in 2008 by essentially replicating the old music store model, except selling singles instead of albums, and doing it with digital files instead of CDs.
The next big shift will be to freemium music services like Spotify (as opposed to the limited-trial subscriptions currently available to Americans), which harness the power of social networks to let fans share music with each other like one big, happy, legal version of the P2P services that continue to hurt labels’ bottom lines. (For a preview of how this will feel, see the promising-if-misreported integration of Facebook and Spotify, or check out how many YouTube music videos are in your Facebook feed.)
Back in December, StrategyEye posted a report (which Spotify spokesman Jim Butcher told us was taken out of context) that Spotify’s head of business development claimed labels were afraid of Spotify launching in the United States because “There are existing music services that we would presume pay the labels a lot of money. Not least iTunes.”
More damningly, he implied that label executives received bonuses based on iTunes sales that they might not be willing to risk on Spotify. They might, however, be willing to risk those bonuses on Apple’s next music service.
Again, this is just a theory, but it does explain why we still don’t have even the newly-limited version of Spotify in the States. We wouldn’t be too surprised to see Spotify show up on the heels of Apple iCloud, or whatever it’s going to be called.
(In case you’re wondering what all the fuss is about with Spotify, people who have used it like it for manifold reasons: collaborative playlists, a P2P streaming architecture, the ability to cache sections of songs in advance for lightning-fast streaming, a flawless design that stands in stark contrast to bloated iTunes, the ability to cache playlists on smartphones, and above all, its relatively-unlimited freemium trial.)
Update: @jhershkowitz tweeted in response to this article, “Interesting, but labels don’t *want* Apple to continue to have all the control. They need a viable competitor (that pays).” He has a good point, but I have an answer: By allowing “Apple iCloud” the chance to cannibalize iTunes a la cart downloads before someone else does, labels can extract more favorable streaming rates from the service.