Spotify Closing In On Deal With Largest Record Label? [REPORT]

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As soon as that deal is sealed, according to one source who spoke with Reuters, the company might proceed with its United States launch, even though it still hasn't signed the number three music label, Warner Music Group.

Things are starting to happen quickly for the London-based Spotify. Last week, according to CNET the company signed another one of the major record labels, EMI, and last month, it made a music deal with Sony for its U.S. music rights. If it succeeds in adding Universal Music Group to its stable, it will have three of the four major music labels on board for an American launch.

What's the holdup? The U.S. record companies are reportedly not overly enthusiastic about Spotify's "freemium" business model, where the company gives away ad-supported music in hopes of signing paying subscribers to its ad-free version. That premium service lets users choose and replay their music.

Beyond that, the record companies are concerned that current digital music sales by outlets such as the iTunes Store might be adversely affected by free music from Spotify. In an interview with StrategyEye, Spotify's business development head, Faisal Galaria, says the launch delay has to do with the profitable relationship between record companies and Apple:

If you’re the digital team [at a label] and 80% of your revenue was coming from one place, how much are you going to piss them off until someone else can guarantee all that revenue from a new source?"