EMI on board with Spotify in the U.S.

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EMI Group, whose music catalog includes Jay-Z, Kanye West and Norah Jones, is close to a deal with Spotify to bring the popular European music service to the U.S., according to people familiar with the negotiations.

Although final details of the contract have not been nailed down, both companies have a broad agreement to make available most of EMI’s treasure trove of 1.2 million songs on Spotify’s music subscription service should it launch in the U.S.

Spotify, which offers a free ad-supported service and a premium version that costs 10 Euros a month in Europe, has been trying to cross the Atlantic for more than a year. Its chief executive, Daniel Ek, in March announced at South by Southwest in Austin, Texas, that the company was close to introducing its service in the U.S.

Spotify, based in Sweden, has roughly 10 million users in Europe; the vast majority use the free service. About 750,000 pay a monthly fee to get the premium service.

Although all four major record labels, including EMI, Sony Music Group, Universal Music Group and Warner Music Group, have licensed their music to Spotify in Europe, they have been much more reluctant to make the same deal in the U.S., the world’s biggest music market.

Part of the concern is that advertising revenue for the free version has been disappointing, according to music industry executives. But more worrisome to the music companies is the small number of Spotify’s users, 7.5%, who have been willing to switch to the pay service.

As a result, the record companies have been pressing Spotify to find more effective ways to nudge its free users into its premium service and boost its percentage of paying users closer 15%.

It’s unclear how Spotify was able to satisfy EMI’s demands, and the deal could come unhinged at the last minute, executives familiar with the deal cautioned.

If EMI signs on, it would be the second major label to do so, after Sony.

An EMI spokesman declined to comment. A message to Spotify’s spokesman was not immediately returned.

-- Alex Pham

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