We hate to hit replay on this one but following New York Post’s story today that European streaming music service Spotify is close to a deal with Sony Music and thereby close to launch we decided to call a few people to confirm.
It appears there’s still some distance between Spotify and the big major labels my sources tell me.
“It’s not happening anytime soon, they may be close to getting deals done, but the labels are still not confident about their business model,” one person said.
Spotify’s model is simply to offer free streaming of music to millions of fans with the view to converting a decent proportion of them to paying customers for the customizable features. You’ve read this elsewhere of course and here that the labels expect Swedish founder Daniel Ek (pictured) and his team to provide a boatload of cash as a way to reduce their risk on doing a deal.
But our sources argue it’s not as simple as a “show me the money” scenario. The conversations have fixated on whether Spotify will ever be able to get its conversion rate above 10 percent since they claim even in its best European markets its around 6 to 7 percent on average.