Spotify launches US streaming music service

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Streaming music service Spotify is set to launch in the US, after thrashing out deals with the major record companies.

Its American service had previously been put on hold, apparently because the labels were not convinced about its ability to make them money.

About 10 million people use Spotify across parts of Europe, with one million paying for its premium service.

The company has reduced elements of its free product, ahead of the US launch.

In April, limits were introduced on the number of times users of the basic version could play tracks.

Total listening time was also reduced to 10 hours per month for the free service.

The move was widely seen as a pre-emptive concession to the American record companies which are uneasy about moving to ad-funded or subscription-based distribution.

Paying pennies

Research suggests that services such as Spotify, Last.FM and Rhapsody yield relatively low returns for artists.

Music industry analyst Mark Milligan calculated an average pay-per-play figure on Spotify, based on the Ben Rodgers Band, of $0.004 (£0.002).

Cracking the United States might make the numbers more attractive, according to Giles Cottle, senior analyst at Informa Telecoms and Media.

"They will only get their model to work if they successfully launch in the US.

"It works if you get a large number of plays and you can get a lot of people to sign up to the premium service," he said.

Despite industry trepidation, Spotify has attracted high profile fans.

Facebook founder Mark Zuckerberg described it as "pretty amazing", while soundtrack composer and Nine Inch Nails frontman Trent Reznor took to Twitter to express his excitement about the US launch.

Spotify is likely to face competition in the US from online jukebox Pandora which claims 100 million registered users.

Premium membership of Spotify in the US costs $9.99 (£6.19) - considerably cheaper than the UK price of £9.99 and 9.99 euro in mainland Europe.

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