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Tuesday, May 04, 2010, 11:20 am PT (02:20 pm ET)

Spotify plotting US launch to compete with Apple's iTunes

As Apple is rumored to be working on its own iTunes streaming music service through the acquisition of Lala, rival European service Spotify could beat Apple to the punch with a 2010 U.S. launch.

According to CNNMoney.com, the U.K.-based service is "coming soon" to the United States. A specific launch date was not given, though a spokesperson for the company said they intend to launch by the end of 2010, and rumors have suggested a debut could come as early as this summer.

Spotify offers cloud-based streaming music with more than 8 million tracks for free, with advertising support. For $15 per month, users can access the service with no ads, and can download up to 3,333 songs to an iPhone or Android handset for offline use.

With a service like Spotify, users don't actually own any of the music, but it does give the the convenience of accessing titles from anywhere, without having to transfer music to multiple computers and devices. Songs can also be purchased and downloaded from the online catalog.

Author David Goldman cited numerous analysts who feel that Spotify is a superior product to iTunes, despite the fact that its 8 million songs is less than the 11 million currently offered by iTunes. Mark Mulligan of Forrester Research said a new feature that allows users to share music and view friends' playlists on Facebook has made it a viable competitor to Apple's desktop application and content store. He also said that the arrival of Spotify in the U.S. will virtually guarantee that Apple will release a similar feature.

Spotify


Late last year, Apple purchased streaming music service Lala for $85 million, leading to speculation that Apple is working on a cloud-based iTunes that would allow users to stream their music from multiple devices and even Web browsers, without using the iTunes desktop client. While Apple has remained tight-lipped, some have said the service will arrive in 2010.

Last week, Lala announced that it would cease operations on May 31, giving users who bought songs through the site an iTunes credit. That date is just a week before Apple is set to kick off its annual Worldwide Developers Conference on June 7.

The timing has led to some speculation that Apple could announce an iTunes cloud feature at WWDC 2010, though MediaMemo's Peter Kafka reported last week that such a move is not expected anytime soon.

"Sources tell me that in the past few weeks, Apple has started signaling to the labels that it's interested in a Web-based version of iTunes, its dominant music retail platform," Kafka wrote. "But those conversations are preliminary at best. So if you're expecting to hear about an “iTunes.com” offering in the near future — like during Apple’s June 7 developer conference — you're likely to be disappointed."

He did, however, reiterate Apple's alleged intentions to offer a Web-based media service, allowing users to stream songs they own to multiple devices. While Apple has reportedly pitched the idea to music industry executives, negotiations fell flat because the record labels felt streaming a single purchase to multiple devices constituted multiple uses, which would result in a greater share of revenue from iTunes purchases.

"Apple could also try a subscription/rental model for iTunes, like the one currently offered by the likes of Rhapsody, MOG and Spotify (at least in Europe)," Kafka wrote. "But no one has figured out how to rent music at a price that satisfies consumers, the labels and the music services. At least not on a large scale."

Analysts told CNNMoney.com that while Spotify may offer features that Apple's iTunes currently does not, it would be a mistake to count the iPod maker out, particularly before seeing what its subscription or streaming model might offer.

"Using iTunes across multiple PCs is terrible right now," Matt Anderson, partner at Booz & Co.'s consumer, media and technology practice reportedly said, "but no one knows where this thing is fully going yet."