Spotify could strike a deal for US rights to songs from Universal Music Group in a few weeks.
Reuters reported citing people familiar with the matter that the European digital music service provider could end up launching without Warner Music Group.
Spotify has licensing deals with all the major music companies in Europe. In the US, it has a deal with Sony Music and has also reached a deal with EMI.
There are concerns about Spotify’s "freemium" model. Music companies in the US believe that offering free music on Spotify could harm sales at both services like Apple’s iTunes Music Store and paid music subscription services like Rhapsody.
Spotify’s "freemium" model offers music for free but with limitations and advertising, hoping that members will move to its premium paid service, which does not feature ads and has less restrictions.
There are also concerns for the label owners about the conversion rate from free to premium music. Moreover, there are fears that new cloud-based subscription services will launch this year from Google and Apple.
This week, Spotify was reportedly valued at $1bn by investors.
Spotify declined to comment on the funding reports or on its label deals.
A Universal Music spokesman has confirmed that the company is in talks with Spotify. Warner Music declined to comment.
