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Spotify exec eyes Apple with suspicion

Just as Spotify finally appears headed to the U.S., one of its execs suggests that Apple had something to do with the Web music company's licensing troubles.

Do Spotify executives believe Apple had anything to do with their company's inability to make the leap to the United States?

In an interview given last month but not published until Monday, Faisal Galaria, Spotify's chief of global business development, sure gave that impression. Galaria made it clear that he didn't know whether Apple tried to derail Spotify's U.S. launch, but he also took the time to show how Apple was in position to pressure the labels into declining to license music for Spotify U.S.A.

"If you were iTunes, what would you be doing?" Galaria told StrategyEye, a media consulting firm.

The interviewer responded that if he were running iTunes, he would build a cloud music service to compete with Spotify, a European music service. To that Galaria said: "If you assume it takes years and years to build a cloud service--it took us two and a half years--then what do you do in the interim? You use your clout presumably with the labels to say 'If you do this, I will do X, Y and Z to you.'"

An Apple representative was not immediately available for comment.

In October, Apple execs told label counterparts that they doubted Spotify's business model would work and expressed concern about effects a free-music service might have on the rest of the market, according to music industry sources who spoke to CNET. Spotify offers an ad-supported service, which is free to users, in addition to charging for subscriptions.

But why would the big record companies back down even if Apple used its position as the top music retailer to discourage them from licensing Spotify? For years, they have searched for an iTunes challenger to break the company's grip on digital music retailing. Galaria offered a potential explanation.

"If you're the digital team [at a label] and 80 percent of your revenue was coming from one place," Galaria said, "How much are you going to p*ss them off until someone else can guarantee all that revenue?...You're a nice, fat big executive at label X, Y, Z. You're getting half a million dollars a year as long as you hit your bonus...are you going to tell iTunes where to go?"

Whatever happened, Spotify may get what it wants. The company has tried unsuccessfully for over a year to move to the United States, setting and missing deadlines multiple times. But in recent weeks, the company has made progress by striking a licensing agreement with Sony Music Entertainment.

Music industry sources said yesterday that Spotify has also made strides in negotiations with some of the other labels during the past week at the Midem music conference in France.

Update:1:06 p.m. PT: Looks like my sources were right about Spotify making headway in negotiations with the labels. The New York Times is reporting that Spotify is closer to reaching an agreement with EMI, the smallest of the four labels.

Clarification 1:06 p.m. PT: Spotify said that while StrategyEye posted its story about Galaria on Monday, the interview occurred last month.