It’s been a tough 2010 for Spotify. After wowing users in the UK and EU they’ve found that America is harder to win over.
A quick primer; Spotify software allows unlimited streaming of selected music from a multitude of major and independent record labels including many of the majors. But as can be read below, Spotify is facing big challanges from iTunes and Google.
Apple executives told their music industry counterparts that they had serious doubts about whether Spotify’s business model could ever generate significant revenues or profits..
Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it’s tough to sell something that someone else is giving away, the sources said.
One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.
Apple is working on a digital cloud service that, according to the sources, would allow users to store their iTunes music libraries on the company’s servers and then enable them to stream songs from the cloud to Web-connected devices. According to music insiders, Apple is considering whether to attach these features to a streaming music subscription service.
Some at the labels are worried that allowing Spotify to encroach on Apple’s turf may dampen Steve Jobs’ desire to launch a subscription service.
Meanwhile, any Spotify launch could be overshadowed by Google Music, which is readying to make a foray into the sector. Music industry sources say Google appears to be running slightly behind its proposed schedule for launching before the end of the year and they now expect the launch to happen sometime in the first quarter of 2011.
Looks like Spotify’s rough ride isn’t over quite yet. Good luck music startups!
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