Apple in talks for iTunes music subscriptions, blocks Spotify in the process

Just as we’ve heard many times over the past few years, Apple is apparently in talks with music labels for a subscription-based iTunes plan that would give customers unlimited access to songs for a fee, the New York Post reports.

Sources tell the paper that Apple’s VP of internet services, Eddy Cue, who heads the iTunes and App Store teams, has been in talks with music executives as recently as a few weeks ago. Apple has in mind tiered pricing for the service between $10 and $15 — but it still needs to work out issues with the labels like how much music to include in every tier, and how long consumers have access to content.

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This time around, Apple’s subscription ambitions may actually bear fruit. The Post writes: “One top music exec said the labels are supportive of the idea and believe it could re-energize digital music sales. While album downloads have been on the rise, single track sales were flat in the first half of 2010 compared to the previous year.”

Apple’s discussions with record labels may be impeding the popular European music streaming service Spotify, which is also in negotiations with record execs, CNet reports. Spotify offers European music fans access to a wealth of streaming content for free, while more hardcore listeners could pay a small subscription fee. Music labels are apparently unconvinced that Spotify’s business model can make money and will require large upfront royalty fees from the company before any agreements are made.

Research group Nielsen also recently named subscription streaming services as a potential reason for the drop in digital singles sales this year, something music execs and Apple are surely aware of. Apple execs have expressed their doubts to record labels about Spotify’s viability, sources tell CNet.

Spotify has already missed two previous US launch dates thanks to its inability to gain music industry support. Missing its next self-imposed deadline for the end of the year could prove disastrous for the company. As CNet points out, other ad-based music streaming services haven’t fared so well. Imeem sold to MySpace for a reportedly low amount, and SpiralFrog simply crashed and burned.

Google may also be working on a music store and streaming service of its own, which would instantly create another major obstacle for Spotify. If Google manages to integrate the service with its increasingly popular Android phones, there’s little chance smaller streaming music startups like Spotify could compete.

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