14 DAY TRIAL // The online music business has proven a tough nut to crack again and again. Pioneering free service iMeem is more or less dead in its current form and in the process of being acquired by MySpace. Countless others have failed to provide a free music streaming service that actually generates revenue and it looks like Europe's music streaming darling Spotify won't be able to deliver on the promise in the US either.
This has been known for a while, as the service has pushed back plans to launch in the US after concerns that it won't be able to offer a free music streaming service like it does in Europe. And now the major music labels are “concerned” that the free model just doesn't work and it would be unwise for Spotify to launch the same service in the US, as the Financial Times reports (subscription required).
They are right to be worried too, free music streaming services in the US have failed over and over again and the last bastions are closing down too. iMeem is about to be sold with its future uncertain and MySpace Music may stop offering free streaming not too far in the future.
There's just one small glitch in the labels' rhetoric though. While it's true that free services have failed, the reason they have failed has entirely to do with the ridiculous license fees these services have been forced to pay by the very same labels which are now “unconvinced” that the model works. It doesn't get much more hypocritical than that.
The real problem here is that these labels are preventing Spotify from offering US users the same service which millions of Europeans have fallen in love with. It's true that Spotify has been struggling to drive up revenue figures and that ad-revenue alone can't cover its costs, which, again, are mostly due to licensing fees not the actual costs of the service. The company is trying to please the labels, which are pushing for a subscription model in the US, meaning that, for one, people over there will have to wait a little longer for the service, and secondly, they may get a severely crippled free version if they get one at all.