Spotify Now Targeting Q3 for U.S. Launch

A smash hit in Europe, streaming music service Spotify is now aiming to launch in the U.S. by the third quarter of 2010, according to a Bloomberg report. Originally slated to appear stateside sometime last year, Spotify has repeatedly pushed back its U.S. launch, bogged down by licensing issues surely tied to fading confidence in the free ad-supported streaming model. Offering free streams as well as a premium paid service, Spotify’s fortunes are closely tied to its conversion rate of free to paying customers, and the company hasn’t always pleased major-label content owners with its returns.

The U.S. launch may coincide with the rollout of a revamped version of the product. CEO Daniel Ek told a SXSW crowd earlier this month that a “more connected” edition of the product is on the way, with more social and sharing features; Ek has also outlined ways in which the service can serve as a platform for selling tickets and merchandise as well as providing a direct-to-fan communications channel. The Bloomberg report also says apps for BlackBerry (s RIMM) and Palm (s PALM) phones are coming soon; Spotify already has iPhone, Android and Symbian apps.

That sounds great, but a lot can change in a few months. Spotify already faces increased competition as subscription services continue to spring up — each taking a slice of the paying consumer market it will need to capture. Spotify may also have to adjust its own model as content owners’ demands and expectations continue to shift, and Ek has acknowledged that the U.S. model will feature “slight changes” compared to what Europeans currently enjoy. He has insisted that the U.S. version will have a free component, although I have my doubts.

Spotify’s product is terrific, and it has won over investors. Its conversion rate is improving — it’s now about 4.6 percent, with some 325,000 paying customers among 7 million total users — and a Universal Music Group digital executive said in January that the company’s model appears to be sustainable, despite the need for a double-digit conversion rate. But Spotify once suggested it could come to the U.S. by the third quarter of 2009, then aimed for year’s end, and now says it won’t make it out until the summer. Forgive me for wondering if 2011 is a possibility.

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