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EMI may be near deal with Spotify music subscription service

Final details remain unresolved. One concern is that only 7.5% of European users are paid subscribers while the rest opt for the free service.

February 03, 2011|By Alex Pham, Los Angeles Times

EMI Group, whose music catalog includes Jay-Z, Kanye West and Norah Jones, is close to a deal with Spotify to bring the popular European music service to the U.S., according to people familiar with the negotiations.

Although final details have not been resolved, both companies have a broad agreement to make available most of EMI's treasure trove of 1.2 million songs on Spotify's music subscription service if it launches in the U.S.

Spotify, which offers a free, ad-supported service and a premium version that costs 10 pounds a month in Britain and 10 euros elsewhere in Europe, has been trying to cross the Atlantic for more than a year but had been unable to strike deals with record companies until recently.

Spotify, based in Sweden, has about 10 million users in Europe; the vast majority use the free service. About 750,000 pay a monthly fee for the premium service.

All four major record labels — EMI, Sony Music Group, Universal Music Group and Warner Music Group — have licensed their music to Spotify in Europe, but they have been much more reluctant to strike the same deal in the U.S., the world's biggest music market.

Part of the concern is that advertising revenue for the free version has been disappointing, according to music industry executives. But more worrisome to the music companies is the small number of Spotify's users, 7.5%, who have been willing to switch to the pay service.

As a result, the record companies have been pressing Spotify to find more effective ways to nudge its free users into its premium service and boost its percentage of paying users above 15%.

It's unclear how Spotify was able to satisfy EMI's demands, and the deal could unravel at the last minute, executives familiar with the deal cautioned.

If EMI signs on for the U.S., it would be the second major label to do so, after Sony. EMI and Sony accounted for more than 38% of the U.S. music market in 2010, according to Nielsen SoundScan.

An EMI spokesman declined to comment. A message to Spotify's spokesman was not returned.

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