July 6, 2011 1:02 pm

Spotify signs deal with Virgin Media

Spotify and Virgin Media on Wednesday announced a deal that could help the music streaming service boost numbers of paying customers and reach a wider audience.

By the end of the year, Virgin Media’s 4m UK customers will be able to access Spotify’s catalogue of 13m songs through their TV set-top box, laptop or mobile phone.

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The Spotify subscription would be offered as part of Virgin Media’s bundle of TV, broadband and phone services. The company did not specify prices but said the cost would be lower than a direct subscription with Spotify.

It currently costs £4.99 a month for unlimited access to Spotify’s catalogue and £9.99 a month for a premium service, which allows access to music by mobile phone. The Anglo-Swedish company also offers a free, advertising-supported service but this will not be part of the Virgin Media deal.

The deal will help Spotify reach a more mainstream audience, beyond the early adopters and music fans who so far make up the bulk of its customer base. Gaining greater numbers of paying customers would help smooth the way for the company’s long-planned launch in the US, which has been held up by concerns from some music industry bosses about the company’s ability to convert its non-paying users.

The company has tried to allay concerns in a number of ways. Earlier this year, it cut back the number of hours of music that users can listen to for free, a change seen as a response to pressure from the music labels that licence their content to Spotify.

In March, the company revealed that it had about 1m paying customers, or about 15 per cent of its active 6.67m active user base.

Spotify has signed a deal in Sweden with Telia, the telecoms operator, similar to the Virgin Media contract. It also has a deal with 3, the UK mobile phone operator, to offer its content over mobile phones.

For Virgin Media, the deal is aimed at boosting the appeal of its bundled TV, broadband and telephone services. Although it is a leading internet and TV provider, the company remains a distant fifth in the UK mobile phone market. Two years ago, the company announced plans to launch a music streaming service but was only able to secure a licensing deal with Universal.

The two-year deal will make Virgin Media the only TV and internet provider to have access to Spotify services in the UK. Virgin Media said users would be given exclusive content and offers.

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