8 Comments

Summary:

Much-vaunted European music service Spotify has been craving a move to the United States for a long time — but has been stuck in tough negotiations with American labels. But its plans could receive a huge boost if rumors of a $100m investment prove accurate.

spotify-logo

Russian investor Digital Sky Technologies has been on a tear recently, with significant funding going into Facebook, Zynga and Groupon. Now the suggestion, reported by Techcrunch is that the investment fund is preparing to put $100 million into European music service Spotify.

Since the Swedish service first launched in 2009, it’s raised EUR83 million (around $113 million). But industry watchers believe this extra money will help Spotify launch in the American market.

The service has long said it plans to expand to the U.S., but Spotify’s progress has been much slower than it would have led its backers to believe. Although tough negotiations with the major labels has caused most of the wait, the lag between Spotify’s announcements and its U.S. launch date has still left critics suggesting the firm is all talk and no action. But things are slowly falling into place: it’s just landed a licensing deal with EMI, and already has Sony in the bag.

Not everyone thinks that the U.S. market is worth taking on, however. After all, Spotify has made significant progress in Europe with a large and loyal fanbase (10 million or so users and 750,000 paying subscribers) and plenty of publicity. Rafat Ali, the founder of PaidContent.org, is among those who argue that Spotify should focus on serving those users better. And others suggest perhaps it needs to get its business in order: Helienne Lindvall at the Guardian, who has been one of Spotify’s most consistent critics, says the site needs to put more effort into paying artists, not labels, particularly those on independent labels.

But faced with growing competition in the States, including Rdio, MOG and Pandora, it looks like Spotify thinks the best defense is a good offense. Plus, Pandora may soon have access to more funds if its planned initial public offering goes through.

Launching in the U.S. will give Spotify access to the single largest music market in the world (although it is around the same size as the collected states of Europe) and — it hopes — help it run around the competition. After all, its biggest selling point is that it’s incredibly simple to use and delivers, by and large, superb quality: I personally think that right now, it’s superior to anything else around in terms of interface and clarity.

But there is also one other big reason Spotify is so focussed on America: Apple.

The Swedish business has always suggested that Apple is discouraging labels from dealing with Spotify, possibly because Apple plans to launch its own cloud-based services in the future. In Europe, the labels were given a slice of Spotify’s equity in return for their compliance — perhaps a part of DST’s money, if it turns out to be real, will go to sweetening the deal on the other side of the Atlantic?

Related content from GigaOM Pro (sub req’d):

You’re subscribed! If you like, you can update your settings

  1. Bring on Spotify! As much as I love Rhapsody’s tools for discovering new music, I hate the service’s slow client and its confusing (intentionally?) account management tools.

  2. Ypulse Essentials: Hall Of Game Awards, Old Navy Audio Threadz, Green Label Sound iTunes Storefrong | Ypulse Monday, February 21, 2011

    [...] First to be featured? Hip-hop act Cool Kids. In other music news, popular European music service Spotify may finally make the leap across the pond with the help of $100 million in VC backing) (Billboard) [...]

  3. No, they just need a UK proxy

  4. Future of Digital Music Wednesday, March 2, 2011

    [...] Does Spotify Need $100M To Crack America? (gigaom.com) [...]

  5. For Spotify, a Cool Million Subscribers: Tech News and Analysis « Monday, March 7, 2011

    [...] online music start-ups in the business. The company has raised $113 million and is said to be getting a fresh slug of money — $100 million or so — and is valued at over a billion dollars. The company is likely to make that news announcement tomorrow. Spotify [...]

  6. The management tools does work in one’s favor. This makes tasks really simpler.

  7. Spotify Shift Signals The End for Ad-Supported Music: Tech News and Analysis « Thursday, April 14, 2011

    [...] other question, of course, is what this means for Spotify’s long-awaited American launch. A more rational business is, perhaps, more likely to get the deals it needs to hit the U.S. [...]

  8. Here’s Spotify’s Master Plan: Tackle iTunes Head-On: Tech News and Analysis « Wednesday, May 4, 2011

    [...] focused on the way it has been angling to move into the U.S. market, particularly since it has a substantial war chest after raising $100 [...]

Comments have been disabled for this post