MediaFile

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.

So 2010 was the year that wasn’t as far as a major revolutionary digital music launches were concerned. Label executives have been hoping fervently for some real competition to take on Apple’s iTunes. Not that they don’t want iTunes to do very well but having one company control 70 percent of recorded music sales in your biggest markets like the US and UK is perhaps not best for industry growth.

This has meant that whenever it looks like there could be real competition — remember the hopes for Microsoft’s Zune? There’s always been an overreaction from the labels in the hype department. Remember how Amazon would be a true digital rival? Today it’s market share hovers around the 15 percent mark.

So when Google started talking to labels about a music servicethe labels got very excited. So far we know Google has proposed a download store and a digital music locker which will allow you to access music you own wherever you are. They had hoped to have it up and running by Christmas but dealing with labels takes time. In the meantime Google has been getting its house in order for become more a content middle-man media company by promising to work harder on issues like copyright.This is likely because it would like to have more mainstream content for its Android wireless phones and tablets if it is to be a more complete competitor to Apple’s iTunes/iPhone/iPad/iOS ecosystem.  We’re hearing the labels are still very confident that Google will get something up and running sooner rather than later despite the delays. Google is also still looking for people to run its music service, though negotiations have been led by Android founder and Google VP of engineering Andy Rubin (pictured, above).

The numbers are in for two of the biggest music markets and unsurprisingly, sales  are down yet again, continuing a trend of the last decade.

US:

According to numbers from Nielsen SoundScan, total album sales, traditionally the heartbeat of the industry, were down 13 percent in the 52 weeks to Jan 2 this year. Over 326 milion albums were sold in all formats including digital versus 374 million a year  ago. Overall music sales, when you include albums, singles, music videos and digital tracks was down 2.5 percent. Music sales were helped a bit by digital track sales holding steady up 1 percent to 1.17 billion units but that’s a far cry from the double digit percentage growth seen in recent years.

The top dog in the label business is still Universal Music Group with a 30.84 percent market share of album sales, followed by Sony Music Entertainment with 27.95 percent, Warner Music Group at 20.01 percent and EMI at 10.18 percent. Others, which represent independents, are at 11.02 percent. Interestingly only Universal and the troubled EMI grew market share slightly this year, EMI likely had a Beatles digital bump as well as some rare US hits like Lady Antebellum (top selling physical album).

Music industry types must have had been reaching for their tranquilizers this afternoon, following a report that Apple is in early stage talks to buy Spotify. The report spread quickly, as these things do, and some thought it made  a lot of sense.  So Apple, maker of the world’s most popular music device, the iPod,  which already owns the No.1 music  download retailer iTunes, would be buying Spotify –the much-loved and critically acclaimed music streaming service, just as it’s finalizing deals to launch in the U.S.? This would be too much to handle for many music executives, who think Apple already holds way too much power.

They’ll probably be relieved to know that after an initial flurry of panicky phone calls we got a helpful call from one person close to Spotify, who shot down  rumors of a potential sale to Apple or anyone else  as  “completely untrue”.

Founder Daniel Ek has often tried to position Spotify as a company working with the music industry for the long term, as he did here on his company blog.

Be careful what you wish for because you might just get another major label’s catalog.

eMusic, the independent music lovers’ independent digital music site, is well, no longer that independent. As of November, it will now have music from the world’s number one music company Universal Music, adding more than 250,000 tracks to eMusic’s catalog bringing it to 10 million.

But with the big dog joining the pound eMusic has had to adjust its monthly subscription model. It will no longer offer a fixed number of song credits and will instead switch to good-old fashioned dollar and cents pricing for individual songs. For example right now a starter package of $11.99 will get you 24 song credits a month but going forward $11.99 a month will get you as many songs as $11.99 will buy. eMusic argues that their price points are on average 20 percent to 50 percent cheaper than iTunes or Amazon MP3 store which means many of their songs are around the 50 cent-mark.

Of the many ways the traditional music industry has struggled in the fast evolving digital music world has been understanding who is listening, why they’re listening , when and where they’re listening and find ways to build music-based products and services around that — especially since not as many people are buying music as they used to.

This is where The Echo Nest comes in. A start-up based in Somerville, Massachusetts is a self-described music intelligence company that powers music applications and services for developers and media companies based on data that it is automatically collates from millions of songs and music articles around the Web.

Chief Executive Jim Lucchese, a former music lawyer, compares one element of Echo Nest’s offering to the ever popular Pandora whose Music Genome Project indexed over 800,000 songs in a major labor of love which involved hundreds of musicians/analysts. He says Echo Nest’s technology is able to index millions of songs on any number of criteria in seconds.

Steve Jobs’ return to the public eye on Wednesday stole some of the attention from Apple’s products announcements which, if not earth-shattering, weren’t exactly chopped liver either.

The company unveiled new, cheaper iPod touches and affordable iPod nanos with video cameras. It also showed off the latest version of the iTunes software with new bells and whistles likely to cheer music lovers, including iTunes LP, which offers additional content such as liner notes, making a downloaded album a bit more like its vinyl predecessor.

Analysts liked the new nano most of all, although some wondered why the touch didn’t also receive a camera, as had been rumored.

Britain’s Sky News caused a bit of a stir on the blogosphere on Tuesday after it cited John Lennon’s widow, Yoko Ono, as saying the Beatles back catalog was finally going for sale on iTunes: seemingly confirming a longstanding rumor that had gained momentum ahead of a widely watched Sept 9 Apple music-entertainment event.

But the report by the 24-hour news service, spotted by 9to5Mac and TechCrunch, among others, was stricken off the Sky News Web site hours later and discredited by a numner of other media outlets including Cnet. In response to Reuters’ queries, EMI, which owns the master recordings, sent us this from Ernesto Schmitt, EMI’s global catalog president:

“Conversations between Apple and EMI are ongoing and we look forward to the day when we can make the music available digitally. But it’s not tomorrow,” Schmitt said in comments first made to the Financial Times. Apple declined to comment.

MySpace is looking to buy Web music service iLike for around $20 million according to several blogs. iLike co-founder Hadi Partovi declined to comment when we asked him and MySpace’s PR team also declined to share details.

All Things Digital has the latest details of the deal which they say is around $13.5 million in cash, with a $6 million earn out for the founders which include Hadi’s twin brother Ali who is CEO. Official confirmation of an agreement is being held up by “thorny tax issues” according to All Things Digital’s sources.

The news makes some sense because as MySpace is fast losing ground to Facebook in the social networking arena. MySpace’s owner, News Corp, has indicated that it sees the site becoming more of an entertainment portal.

It’s Napster’s 10th birthday today. How time flies when you’re disintermediating an industry.

In that short time, the music industry has changed somewhat — somewhat on its head. It all started with Napster’s launch on June 1st, 1999 by college student Shawn Fanning (right, in 2001). The file-sharing service changed the way generations of fans would perceive the value of music i.e., pretty much equal to zero.

In the wake of the original Napster’s demise by way of label lawsuits, there have been scores of digital music start-ups, both illegal and legal, that have tried to replicate original Napster’s popularity. Some have surpassed it in sheer customer volume as broadband penetration has grown to mainstream proportions, but few can claim to have genuinely become a by-word for how an entire business sector potentially could be eradicated.