Summary:

Spotify has been offering pay-TV operators a set top box version of the music service for some time now. But so far it only has the deal ink…

Spotify's Daniel Ek And Martin Lorentzon
photo: Spotify

Spotify has been offering pay-TV operators a set top box version of the music service for some time now. But so far it only has the deal inked with triple-play telco TeliaSonera back in October.

That service is launching today on the TeliaSonera TV service in Sweden and Finland, Spotify says, and this is what it looks like…

Telia also carries Spotify with its broadband and mobile service.

Getting carriage with existing services – like mobile, fixed-line, TV or game console operators – is crucial for Spotify if it is to reduce its reliance on its advertising-led service, which it has been downplaying in recent months. Spotify is committed to offering only a premium service on devices other than the desktop; it wants to make Spotify just another customer feature on some other service’s consumer bill.

Despite the importance, Spotify has only racked up such deals with Telia and with 3 UK, with talk of a China deal some time back. UK TV carriage may be problematic because BSkyB (NYSE: BSY) already operates Sky Songs and Virgin Media (NSDQ: VMED) has music service ambitions, too. But the problem is wider than just TV since those two companies are also two of the UK’s largest ISPs and phone providers.

Despite all the hoo-hah about Spotify’s difficult birth in the U.S., it finds itself in a similar position everywhere else, too – it really needs those carriage partners, and it must be a cause for concern that it hasn’t announced any new partners since October.

In hindsight, the main value of the free, ad-supported service has been to amass a user base to convert up to paid services, which could be either direct with Spotify or with a partner…

Labels in the U.S. don’t want to license to a free service, denying Spotify the big net with which to catch these initial users to convert. But Spotify has already proven its product by snagging seven million users in Europe and Scandinavia (there’s pent-up U.S. demand for the service), so this would be less of a problem if it could find partners through which to offer the premium service. In particular, Spotify must start inking deals outside its native Sweden.

The market is set to get crowded, with every man and his dog launching unlimited music access propositions – a model the labels hope will kickstart sales, since individual-track purchases have plateaued in the U.S. in particular.

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