AfterDawn: Tech news

Spotify and UMG close to deal?

Written by Andre Yoskowitz (Google+) @ 26 Feb 2011 1:08

Spotify and UMG close to deal? Last week, popular European streaming music company Spotify announced it had signed a deal with EMI, following a licensing deal it signed with Sony Music in 2010.
Today, new sources close to the talks say the company is "a few weeks away" from netting a deal with Universal Music Group (UMG), the largest label in the world.

The same sources say that Spotify may have to launch with just UMG, EMI and Sony, however, because all talks with Warner Music Group have gone nowhere. Warner is the third largest label in the world.

Investors recently valued Spotify at $1 billion, even though it has had to delay its American launch for almost a year. The platform is hugely popular in Europe, however, and is a mainstay on smartphones.

Universal and Warner executives have publicly expressed concerns that offering free, streaming music may "cannibalize" competing subscription packages like Rhapsody, and even hurt CD sales and individual digital sales, through services like iTunes and Amazon MP3.

The largest concern, however, is whether the service can convert enough users into paid users. Of the 10 million registered users of Spotify, only 750,000 have upgraded to a premium subscription. Spotify is projecting an 8 percent conversion rate for its U.S. launch.

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