It's been a while since the music industry's dimmest hopes and darkest fears were pretty much summed up in one word: Spotify.
Some background: Spotify is a free, streaming music service that took Europe by storm and has threatened for the better part of a year to launch in the U.S. Think Apple's iTunes, except with 6 million songs all available anytime and on a growing coterie of devices. Users can either listen to the occasional ad or pay the equivalent of $14 a month for ad-free access.
Co-founder and CEO Daniel Ek was previously CEO of uTorrent, and his new service uses peer-to-peer architecture to make streaming near-instantaneous.
And just as Hulu users gobble up network TV online with a quarter of the ads, record labels worry the more music users consume, the more they'll have to live with a trickle of revenue. They also worry that few are opting-in to the pay service, meaning it's perpetuating the notion that music is something to get, not something to pay for. The labels licensed Spotify in Europe, but they're seeking a different deal for the U.S., likely a more restricted free service—perhaps a cap on the number of songs—to encourage users to pay. Like Hulu, Mr. Ek wants to put the user first, build scale and then figure out the business.