There has been quite a a hype about the Swedish Music Streaming company, Spotify setting its feet on the US soils and honestly many have been waiting for this for long. Sad news, Spotify has just drained all hopes by pulling off the US launch altogether, thanks to all sorts of roadblocks created by US record labels. Quite astonishing, given that the music streaming service should have been fully functional in the region before 2010 ended. Things have turned out contrary to all such expectations.
The Telegraph reported today that the decision comes due to differences in negotiations amongst the major record labels in the US. The primary disagreement lay with in the labels demanding a hefty sum in guarantees, resulting in Spotify halting its move into the market. The risks involved might just have made the brains at Spotify calculate if the risk is actually worth it, especially for the fact that Spotify has shown profitability in Europe. Of course counting the UK out where it showed £16.66 million loss in 2009.
The issue obviously lies in major record label in the US music market being critical of the freemium model, which means Spotify will have to require additional funding in order to make its move into the US market a reality. According to a Spotify spokesperson, the launch in the US has taken an awful period compared to its start in Europe. He stated “the American music market is the biggest and most complex in the world. It took us 18 months before we were able to launch in Europe, it’s taken us longer than expected in the US”.
Spotify might be a great music streaming service but in my humble opinion it needs to snap out of all the brouhaha it has been creating in connection to its US launch. It’s become more of a soap and trust me this expansion is not happening anytime soon, of course unless it adds a more definite and profitable paid model to please the US labels. To second the same, I would personally suggest Spotify to continue with its operations in the European region, the last thing it would ever want is making an irrational decision by submitting to something that requires them to push ads to support the freemium model or have subscribers pay a large amount for the service.
To sum it up, Spotify needs to concentrate more on its current efforts in the European region, boost its profits considerably enough to support any move into the US market. No matter what funding they have, anything with a price attached is only going to ensure an elongated period of losses in the US market.