The big three American labels are holding up Spotify’s India launch over the streaming service starting to license music directly from artists, Music Business Worldwide and the Financial Times reported. The labels, Warner, Sony and Universal, account for the vast majority of popular music in the US and much of the Western world. They are exercising that clout by not giving Spotify the licenses to their music for India, the reports say. Music licenses are sold by territory, so Spotify can’t launch in India until the labels give the streaming service their blessing.

Direct licensing

Spotify’s direct licensing arrangements were first reported last month by Billboard. The deals are non-exclusive, meaning other streaming services are free to approach those artists for the same content. Still, Spotify is reportedly paying artists hundreds of thousands of dollars, and labels are worried. Since direct licensing cuts out the labels from the process, labels see this as a threat to their business in the long term.

This is also why Spotify and other music streaming apps usually don’t have exclusive content — their deals with labels are made under the understanding that they are not going to leverage partnerships to reach a position where they will start competing with the latter. Holding up the India release is the labels’ way of coercing Spotify into falling back in line. “We already have multiple, very strong partners in all of those markets,” Music Business Worldwide quotes an American label executive as saying. “It is up to Spotify to convince us why we should help them compete. And right now, for obvious reasons, we don’t feel very convinced.”

Spotify in India

Spotify has an office in India and has hired an undisclosed number of employees there. Music Business Worldwide reported that the service planned to have a ‘soft launch’ over the summer this year. That timeline might be delayed given this development. Spotify India is headed by ex-OLX India CEO Amarjit Singh Batra, and head of market operations Akshat Harbola. The company faces stiff competition from over five other established services like Saavn, Gaana, Airtel’s Wynk, Hungama Music, Apple Music, and others. Per an industry estimate quoted by FT, fewer than a million Indians pay for streaming music, which pegs the average number of paying subscribers per service to less than 200,000.

Read: Here is what Spotify will be up against in India