A smash hit in Europe, streaming music service Spotify now reportedly aims to launch in the U.S. by the third quarter of 2010. Once expected in the second half of 2009, the rollout has been delayed as questions about Spotify’s business model have arisen.

A smash hit in Europe, streaming music service Spotify is now aiming to launch in the U.S. by the third quarter of 2010, according to a Bloomberg report. Originally slated to appear stateside sometime last year, Spotify has repeatedly pushed back its U.S. launch, bogged down by licensing issues surely tied to fading confidence in the free ad-supported streaming model. Offering free streams as well as a premium paid service, Spotify’s fortunes are closely tied to its conversion rate of free to paying customers, and the company hasn’t always pleased major-label content owners with its returns.

The U.S. launch may coincide with the rollout of a revamped version of the product. CEO Daniel Ek told a SXSW crowd earlier this month that a “more connected” edition of the product is on the way, with more social and sharing features; Ek has also outlined ways in which the service can serve as a platform for selling tickets and merchandise as well as providing a direct-to-fan communications channel. The Bloomberg report also says apps for BlackBerry and Palm phones are coming soon; Spotify already has iPhone, Android and Symbian apps.

That sounds great, but a lot can change in a few months. Spotify already faces increased competition as subscription services continue to spring up — each taking a slice of the paying consumer market it will need to capture. Spotify may also have to adjust its own model as content owners’ demands and expectations continue to shift, and Ek has acknowledged that the U.S. model will feature “slight changes” compared to what Europeans currently enjoy. He has insisted that the U.S. version will have a free component, although I have my doubts.

Spotify’s product is terrific, and it has won over investors. Its conversion rate is improving — it’s now about 4.6 percent, with some 325,000 paying customers among 7 million total users — and a Universal Music Group digital executive said in January that the company’s model appears to be sustainable, despite the need for a double-digit conversion rate. But Spotify once suggested it could come to the U.S. by the third quarter of 2009, then aimed for year’s end, and now says it won’t make it out until the summer. Forgive me for wondering if 2011 is a possibility.

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  1. I’ve never used Spotify, so I’d love to better understand what exactly it brings to the table. Assuming that they have to go pay here in the US, what sets them apart from Rhapsody, Napster, MOG, Lala (which is has a slightly differ pay model), etc.?

    They definitely shouldn’t hit the ground here in the US until they get comprehensive licensing. Even as a longtime supporter of the subscription/streaming model, I’m still frustrated by the amount of music not available on these services. They all tout having X million sonds available, but I still manage to find dozens of songs that I want to listen to that aren’t available. I understand that it is the results of the complexities around licensing, but it diminishes the experience nonetheless.

    1. Thanks David. Without the unlimited free tier, I think a lot of what makes Spotify special would be missing. That said, their user interface and desktop app design is very good, the load times are short, and the overall experience is about as good as they come. The mobile version is likely driving a lot of subscriber growth too; they’ve gotten to 325K customers fairly quickly, and people really enjoy using the product. Om discussed their rise to popularity here: http://bit.ly/c41u0E

      I share your frustrations about the gaps in the catalog, and I wrote about that recently too: http://bit.ly/cEYSmG

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