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Tuesday, October 26, 2010, 03:40 pm PT (06:40 pm ET)

Apple in negotiations to purchase streaming service Spotify [u]

A new rumor claims Apple is in early negotiations with Spotify, a European streaming music service, to potentially acquire the company and bolster its licensing for a potential future cloud-based iTunes [update: Spotify has outright denied the rumor].

Update: Spotify gave a comment to CNet to say that the company has no intention of selling Spotify. A spokesperson said the company ordinarily wouldn't comment on such rumors.

The information regarding alleged talks came Tuesday from Michael Arrington of TechCrunch. The report said that the two companies are talking and have talked before, but a deal is far from certain.

"Apple and Spotify are in on-again, off-again discussions about an acquisition, but at best it's very early in the process," Arrington wrote. "No firm price has been offered, no term sheet tabled. Still, it's interesting that the two are talking."

But he also added a "way more interesting" tidbit: "Last year, around the time that Apple acquired music service Lala, Google and Spotify were deep in acquisition discussion, says a source with knowledge of the negotiations."

Those alleged talks reportedly fell through because Google wanted all label deals to be "grandfathered" in, ensuring the search giant would acquire the same content deals enjoyed by Spotify. But most of those deals have clauses that they will terminate if a company is acquired.

"So if a company like Spotify gets great label deals, like they have in Europe, those deals have to be completely renegotiated of they're acquired," Arrington wrote. "It ends up making these companies largely un-buyable."

Rumors of a cloud-based iTunes streaming service have remained constant throughout 2010, but reports have alleged that Apple's plans have been held up by licensing deals with the content owners. Apple reportedly wants to make any user's iTunes library accessible from any browser or connected device, such as an iPhone or iPad.

In late 2009, Apple purchased streaming music company Lala, in a deal that was believed to pave the way for an iTunes streaming service, in much the same the acquisition of mobile advertising firm Quattro Wireless led to the launch of Apple's iAd network. But while iAds launched in July, a cloud-based iTunes service remains a myth.