Free music streaming service Spotify is having trouble breaking into the U.S. Some had thought it was simply having tough negotiations with record companies that were causing the holdup, but it could be something altogether more sinister. Apple may be blocking the Swedish company to protect both its iTunes Store sales and also a future streaming model, reports Wired and CNet.
CNET, citing sources “close to the talks”, says that Apple is worried that if Spotify launches in the U.S, it could affect MP3 sales which are already flattening, despite Apple being the biggest digital music store in the country. To block Spotify, Apple is fighting in two ways.
The first is to scare labels that a streaming service won’t make any money. CNET’s Greg Sandoval writes that Apple execs warned the labels at a meeting in Los Angeles that “they had serious doubts about whether Spotify’s business model could ever generate significant revenues or profits.”
Sandoval’s sources said that Apple is also worried about free music slowing sales of downloads, and that “it’s tough to sell something that someone else is giving away.”
Spotify is hugely successful in the countries where it is available – Sweden, Spain, Norway, Finland, France, the Netherlands and the United Kingdom – and offers a freemium model. The basic service is free, with occasional audio ads between songs. It’s monthly pay option cans the ads, provides offline storage for songs, allows use of free mobile apps. The catalog counts millions of songs from both indie labels and Sony, EMI, Warner Music Group and Universal.
It is almost certain that Apple will be launching a rival streaming service when its giant data-center in North Carolina is finished, and this could be the real reason Apple is trying to block Spotify, said the Wired story.