[rckclmbr]

It's actually a lot more complicated than that. The record labels listened -- there were multiple news reports of them signing deals with the labels... the labels were actually excited at the idea. The problem was that not only did they have to deal with the labels, but they had to deal with the publishers, each individually. And there's a lot of freaking publishers. To top it off, they also had to convince a carrier to purchase the product, which would mean either they lose revenue or pass the extra $60 on to the consumer, risking lost sales.

They had to change/convince multiple businesses to conform to this new business model, and that's why it was such a grand task -- each one had its own, different risks, and it was up to Beyond Oblivion to convince them the model would work (which it would). The labels themselves were just a small piece of that very large puzzle.

Michael Robertson (mp3.com guy) recently posted a great article (although I can't find it) about the challenges of an online streaming service which summarizes the above a lot better than I said it, plus goes into further detail.

EDIT: Found it. http://gigaom.com/2011/12/11/why-spotify-can-never-be-profit...