The company is Spotify, which streams music from peer-to-peer network participants, and signed up 2 million users in 2006 during its first year of operation in the U.K. and Sweden. In addition to streaming, Spotify also sells music downloads.

The Financial Times reports Spotify is on the verge of closing deals with several investors, including Hong Kong tycoon Li Ka-shing’s charitable foundation.

Spotify currently comes in two flavors – free and subscription. The former is advertising-supported while the latter charges a monthly fee for ad-free music streaming.

From a U.S. point of view, Spotify could be the next big thing when it comes to free music, especially if it can place an app on Apple’s iTunes App store. Gaining access to Apple’s iPhone / iPod Touch user base could mean millions of new users for the company.

Why is Spotify expected to succeed in the U.S. while other free-music services, most notably SpiralFrog, which folded in March, have failed? One word – inventory. According to the Telegraph, Spotify currently boasts of giving users access to more than 6 million tracks from all major record labels, and is adding approximately 10,000 new songs every day.

While Spotify will have to obtain licensing agreements from record labels if it wants to operate in the U.S., the fact the music streams from P2P users instead of centralized servers means an almost unlimited number of songs in the inventory. No matter how obscure your tastes, chances are someone on Spotify has the song, band or CD you’re looking for. Let’s see iTunes top that.

Plus, if Spotify closes on $50 million in investment funding, paying big bucks to the major labels in return for licensing won’t financially hamper it. Published reports indicate services such as SpiralFrog had to pay as much as $1 million to each label for licensing, and that was before they actually opened for business.

One factor holding Spotify back from conquering the world is portability, or, in Spotify’s case, the lack thereof. Current users can only listen to Spotify on their computers, which is why an iPhone / iPod Touch app is important to the company’s growth.

But such an app may not be for all users. The Telegraph also reports the app currently awaiting Apple approval would be for Spotify users opting for the subscription service, thus leaving those seeking a free ride chained to their computers.

Spotify is yet another example of how music fans are moving away from owning music and are embracing a more “on-demand” model of music appreciation. For them, it’s more important to be able to hear a song or CD whenever the mood strikes than it is to have that CD sitting on a shelf.

Of course, having your favorite tracks sitting on your personal player is more an example of possession than “cloud computing.” Spotify just might be able to combine the two concepts into one winning platform. That is, until the next big thing comes down the pipeline.

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Click here for the complete Financial Times article (registration may be required).

Click here for the complete Telegraph article.