Citing multiple unnamed sources, Antony Bruno at Billboard noted that Spotify is “reverting to square one” in its major label talks, and approaching the matter “with a clean slate” to create something workable for the US.

It seems fairly certain at this stage that a European translation of the service into the US is off the table. Warner Music Group is a major roadblock, though others seem to lack the appetite for another freemium free-for-all.

According to the report, Spotify chief Daniel Ek appears willing to launch a modified version – with limitations – while attempting to evolve the service as negotiations continue. Sounds like a recipe for something consumers will hate, but a necessary deal with the devil for Ek

Either way, the BusinessWeek report strongly suggests that Spotify is internally mapping a third-quarter jump. But licensing remains a tricky and time-consuming game, and a source of frustration for both the company and industry onlookers. Deserved or not, the drag is giving majors another dinosaur brush, though executives like Edgar Bronfman are clearly not playing a popularity game.

In Los Angeles recently, Spotify CEO Daniel Ek talked about the halo effect that artists can experience on the application.  Cultivating fans in far-flung countries, generating upswings in related, non-recording purchases.  A return towards the album, and beyond that, a ripe community of downstream API developers.

Bloggers were lapping it up, even predicting an imminent launch in the US.  But Edgar Bronfman is over freemium, over the idea that somehow freebie music communities convert towards premium in a meaningful way.  Even in Europe, premium subscribers are a small percentage of the Spotify total (less than 4 percent), despite the swell of publicity and demand.

And, for that matter, advertisers are hardly banging down the door – while testing at Midem, the French version was mostly filled with Spotify ‘house ads’ and plugs for label content.  In a similar test last summer in London, the British version suffered a similar problem.

That was an issue Amanda Marks of Universal Music Group publicly raised last year.  More recently, Edgar Bronfman said it out loud, dismissing the freemium approach in no uncertain terms.  The quote has been hashed and rehashed, but neither are playing the tech-chic popularity contest.  They need to license concepts that make money, not win praise from Spotify worshipers and ‘with it’ bloggers.  At this point in the game, looking cool is an expensive endeavor.

But the buoyant hype around Spotify has a deadweight counterpart, an underachieving sibling that rarely gets mentioned these days.  As the drool drips on Spotify, a once-promising Rhapsody is getting spun off, zipped up and mailed away by RealNetworks and MTV Networks.  Even after millions in commitments and huge amounts of advertising.

Yet, subscribers slumped towards 675,000 at the end of last year, a drop of 13 percent year-over-year.  The number itself is hardly zero, but nothing near the initial expectations heaped upon it – and the broader subscription space – in the early 2000s.  Yet this is quite an excellent application, one that was well ahead of its time – but ultimately, a niche play.

So, what again is the difference between Spotify and Rhapsody?  Sure, Spotify is freemium, and Rhapsody starts the conversation with premium (limited trials and teasers notwithstanding).  But strip away those models, and the apps are quite similar.  Rhapsody was just as dazzling in 2002, just like Spotify splashed onto the scene in 2008.  But Rhapsody was always locked in its cage, away from freebie paws.

And maybe that’s the point.  The history on Rhapsody (and similar competitors) is all-too-familiar to Bronfman and other executives looking at the same problem.  And simply flipping the model around on the cloud hardly seems like the solution.

Paul Resnikoff, Publisher.