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Spotify Thinks Its Ready For The US Digital Music Market

November 2, 2009

Online music source Spotify is gathering its momentum from overseas as it heads into the US market in an attempt to gain more share of the market currently dominated by Apple’s iTunes.

Spotify’s US introduction will be its next test as the Sweden-based service enters the No 1 music market in the world just one year after it opened for public access.

Spotify holds about 6 million users in Sweden, Norway, Finland, the UK, France and Spain.

According to Reuters, the music service has received high ratings from reviewers of the ease of access it provides to a catalog of more than 6 million tracks.

The service also recently got its mobile debut as it launched apps for the iPhone and mobile phones running on Google’s Android operating system in Europe. The mobile service is available to subscribers who pay about $15 per month.

Also, the firm reportedly gained $50 million in investment funding, valued at $250 million. Record labels also support the service, and hold a collective 18 percent share of the company, according to Reuters.

“If the Spotify experience can be as good as hyped, it has a lot of potential,” Forrester Research analyst Sonal Gandhi said.

“We’ve seen income from Spotify follow a steep growth curve since launch,” said Paul Smernicki, director of digital and direct-to-consumer at Universal U.K.’s Polydor Records.

“Excluding mobile, they are pretty high up the list as a revenue stream for us. But we’re certainly not in the same position as Sweden.”

Spotify offers a free music streaming service, which is ad-supported, but the ad support is not enough to keep the company above water. CEO Daniel Ek recently told a London conference that the firm has about 10 percent of users who have subscribed to the pay service.

“We expect the large majority of our users to stay with free,” said Gustav Soderstrom.

“We’re monetizing it through ads and through selling downloads (through its partnership with 7digital), so it’s a significant revenue source,” he told Reuters.

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