Spotify: is it a Trojan Horse?
To some it is the great white hope in the battle against illegal file-sharing, and the idea that music on the internet comes for free. But to others, it is another nail in the coffin for artists who earn a paltry sum for the streaming of their music.
Valerie Flynn, 17 Nov 2009
Just over a year since it launched, the internet music streaming service Spotify claims to have signed up nearly six million users. The service is available for free in a number of European countries – but is only available on a subscription basis in Ireland. Before 2009 is out, Spotify, which is based in Sweden, is planning to take on the biggest music market in the world when it hits the US. Yes, it’s legal and yes, royalties are paid, making it – on first glance at least – a better option for the music industry that the rampant illegal filesharing and downloading that has been the bane of the business over the past five years in particular.
But increasingly questions are being asked, with one in particular standing out: does Spotify really give artists a fair deal?
Spotify offers two services, one free, the other paid for. Free users stream content from artists or genres they like but there are commercial breaks of about 15 seconds each at random intervals, disrupting the music flow. Premium users, meanwhile, pay €9.99 to have their content streamed ad-free. So in theory Spotify is making money on two fronts – from advertisers and from subscriptions. We’ll come to the details of this business model in a minute but, first up, what return do artists get?
By all accounts, a stream on Spotify is currently almost worthless. Because the service is so new, because royalties are back dated and because the company is very secretive about its finances, it’s difficult to say exactly what figure Spotify is paying out to artists. But there’s plenty of anecdotal evidence out there to suggest it’s very small indeed.
In August, Swedish singer Magnus Uggla withdrew his material from the service, claiming that in six months on Spotify he’d earned “what a mediocre busker could earn in a day.” Of his label, Sony, he said: “After suing the shit out of Pirate Bay, they’re acting just like them by not paying the artists.”
And here we come to what may be, from the artist’s perspective, a major problem with Spotify: the major record labels own an 18% share. As a result they do not have the same incentive to pursue the best possible deal from Spotify for the use of recorded music as artists. Perversely the lower the royalty rates, the more likely Spotify is to turn a profit, the quicker they will receive dividends – on which no royalties will be payable to artists. It is a classic conflict of interest, with the cynical taking the view that record companies win either way.
Page 1/4 <Previous 1 2 3 4 Next>
©Hot Press 2011. Why be a member? | Terms of Service | Privacy Policy