Spotify

Sweden's Spotify digital music service arrived in the U.S. with its catalog of 15 million songs and an operation that is primed to shake up the world's largest and most lucrative music market. With 10 million registered users in Europe, Spotify offers limited hours of music for free or streams unlimited songs for a small fee to computers and mobile phones. That model has analysts wondering if its U.S. debut Thursday spells the beginning of the end for the 99-cent download market dominated by Apple Inc.'s iTunes store.

Spotify, the much-touted European digital music service, announced on its website that it would "soon be landing on U.S. shores. " The Wednesday morning proclamation, which had been widely expected, was still surprising because Spotify had not yet reached a much-needed deal with Warner Music Group to play songs from the record label's extensive catalog, according to industry sources knowledgeable of the negotiations. Spotify Chief Executive Daniel Ek, who promised last year to bring the service to the U.S., has secured agreements with the other three major record labels: Universal Music Group, EMI Group and Sony Music Entertainment.

Since announcing plans last year to bring its popular digital music service to the U.S., Spotify has become the talk of the industry — the sexy European that is expected to sweep Americans off their feet and electrify the sluggish music market. Spotify still hasn't made its grand entrance in the states, but it's expected to do so once it signs a licensing agreement with Warner Music Group, the only major record label that's not on board with the nearly 3-year-old Swedish music company.

It's a new year, and Warner Music Group Chairman Edgar Bronfman is whistling a different tune regarding music streaming services. Bronfman, who a year ago said that free music sites such as Spotify "are clearly not a net positive for the industry," on Tuesday forecast that licensing revenue from these types of streaming services will be an "immediate source of growth" for 2011. "We do see Spotify and streaming revenue from services other than Spotify to be meaningful in 2011," Bronfman said during a call Tuesday morning with analysts to announce the company's first-quarter results: a net loss of $18 million, or 12 cents a share, on revenue of $789 million, down 14%. In the year-earlier period, Warner posted a net loss of $17 million, or 11 cents a share, on sales of $918 million.

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.

The last time a young entrepreneur executed his promise to revolutionize music with computer software, the industry sued him for billions of dollars. A decade after Shawn Fanning unleashed Napster, 26-year-old Daniel Ek is generating tidal waves across Europe with Spotify, a company that offers upward of 10 million songs, streamed free over the Internet. The difference this time is that Spotify is a legal service, sanctioned by the music industry -- to a degree. Ek, Spotify's chief executive, had hoped to launch his service in the U.S. early this year.