Spotify Debuts in Japan, Complete With Karaoke Lyrics (1)

(Bloomberg) -- Spotify Ltd. is bringing its popular online music service to Japan, a large and lucrative market where fans have demonstrated a continuing fondness for CDs and even vinyl records.

Spotify, the world’s largest music-subscription business, will offer a free, advertising-supported service as well as an ad-free version for 980 yen ($9.70) per month starting Thursday, the Swedish company said at a Tokyo news conference. Reflecting the country’s predilection for karaoke, Spotify also introduced a new feature that shows lyrics while tracks are playing.

Chief Executive Officer Daniel Ek is betting that Spotify can carve out a piece of the world’s second-largest music market. Music sales in Japan total about 300 billion yen, mainly because consumers have continued to buy CDs and other physical media. Apple Inc. and Japanese messaging service Line Corp. already market digital music services in Japan for a monthly fee, but Spotify will be the first major service available for free on an ongoing basis.

“We want to make sure Spotify here is long-lasting,” Ek said at launch event in Tokyo. Spotify will bring “two million artists around the world to Japan and bring the Japanese artists we all love to the rest of the world,” he said. The service will also be available on Sony Corp.’s PlayStation consoles.

Earlier this month, Spotify said it had topped 40 million paying customers, with another roughly 60 million users taking advantage of the free service. The number of paid subscribers is more than double the total at Apple.

Spotify is attempting to negotiate new licensing contracts with the world’s biggest record companies as it heads toward an initial public offering by the end of next year. The company isn’t profitable even though it generated more than $2 billion in revenue last year, in part because it pays the vast majority of the money back to music companies and publishers. Spotify is now in advanced talks to buy rival service SoundCloud, the Financial Times has reported.

--With assistance from Adam Satariano To contact the reporter on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Peter Elstrom, Reed Stevenson

©2016 Bloomberg L.P.