Spotify could miss Christmas US launch

Steve Dinneen
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Spotify’s US launch is being met with increasing scepticism by analysts.

The music streaming service said this week it will press ahead with its plans to launch in the US before Christmas, despite announcing a full-year loss of £16.7m for 2009.

“I’d be very surprised if they manage to pull this off in the timeframe they are talking about,” Ben Rumley of Enders Analysis told City A.M. “They have been talking about a US launch for a very long time now but negotiations are moving very slowly. The stumbling blocks are the same as they were six months ago, I can’t see what has changed.

“The US is a nice headline place to launch but it isn’t necessarily right for this business. There have been other players over there for almost eight years who have seen little success. Despite their losses last year, the business in Europe is growing. There is a feeling it should concentrate on Europe before attempting a US launch.”

There is speculation the firm may attempt to press ahead with a low-key launch, which may exclude tracks owned by one or more of the big four US labels. Spotify says it is still in negotiations with all four.

The firm said in accounts released this week that it is in negotiations for extra funding to support its growth plans.

Despite gathering a subscriber base of more than 10m – around five per cent of whom pay for the premium service – Spotify has been dogged by rumours it will collapse under the weight of its royalty payments. This was highlighted by auditor Ernst & Young, which noted “material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern.”