European music startup Spotify has all its “ducks lined up” for a U.S. launch, we’ve heard from multiple sources. It has servers ready to go in the US and, crucially, users already there, even though it has not yet officially launched. In fact it has 30,000 users in the U.S., according to the chatter coming out of the Stockholm tech scene where the company has its main development arm. But these users are being kept quiet.
So why isn’t Spotify launching in the U.S. right now?
It has a wealthy Asian investor in Li Ka-Shing, who invested in Facebook in 2007, Northzone Ventures and Creandum as backers. It has investment from the big music labels – Universal Music Group, Sony BMG, EMI Music, Warner Music Group. It also has “strategic” investors, which include rights holders in other geographic locations, according to our sources, and a mooted $250 million valuation.
We’ve also heard that monetization of the platform is going gangbusters, with most of the upgrades to premium subscriptions being driven by the ability to hold a library of music on the iPhone and Android.
Even Google is on board.
So what gives?
The simple reason, as one of our well placed sources close to the company tell us, is this blunt fact: “Warner are being arseholes.” Yes, that’s a direct quote.
As you will no doubt recall, Warner was the one music label which had huge legal wranglings with YouTube, until the video site eventualy called its bluff and deleted all of Warner’s artists from the service. It was only after that happened that Warner came back to the negotiating table, some months after.
But our information is that Spotify has actually been technically ready for a US launch since October last year. It is only protracted legal negotiations with Warner which is holding everything up. All the other labels are apparently now on board.
Now, of course that is just one side of the story. But Spotify knows that it can’t launch in the US without Warner’s artist roster in its catalogue.
UPDATE: We checked with Spotify and a spokeperson had this to say: “We have great relationships with all of our label partners and we don’t have 30,000 users in the US, this is completely factually incorrect.”
We stand by our sources.