Coldplay, the Black Keys and Adele may strongly disagree, but making your repertoire available on streaming services does not cannibalize record sales. At least that's the verdict of Rob Wells, president of Universal Music Group's global digital business sector, who reiterated his support for services like Spotify and Rdio at the launch of IFPI's Digital Music Report 2012, held in London yesterday.
Citing analysis that Universal Music Group had carried out during the last six months regarding four "key" Universal artists - "a heritage rock act, front-line pop, an urban R&B act and [one] in the MOR field" - Wells dismissed the argument that streaming services have a negative impact on download and brick-and-mortar sales as "absolutely bogus."
As previously reported, Coldplay and the Black Keys are among a number of high-profile acts to spurn streaming services in 2011, with the bands' latest albums, "Mylo Xyloto" (Parlophone/EMI) and "El Camino"(Nonesuch/Warner), respectively, bypassing services such as Spotify or Rdio. Earlier this year, Coldplay's manager Dave Holmes told Business Week that the decision to omit "Mylo Xyloto" from streaming services - at least for the present time - was because he was "very concerned" that "Spotify competes with download stores" such as iTunes.
Black Keys guitarist/vocalist Dan Auerbach has also spoken about his reasoning behind "El Camino" not being on Spotify, telling Billboard earlier this year, "you get paid [for streaming], but it's so miniscule it's laughable."
"It's a cool thing to have if you're in a new band and you want to be heard. But if you are a bigger band that's already known and you rely on record sales for a living, then it's really no place to be," Auerbach went on to say. Adele's "21," the best-selling album of 2011, is also not presently available on Spotify, although it is available at other U.S. streaming services.
Wells, however, rejects the claim that bypassing streaming services is a profitable business decision for the majority of artists.
"We've done an awful lot of analysis over the last six months in terms of value to individual artists and specific genres from subscription services around the world and specifically through the model of payment, comparative to other modes and methods of consumption," Wells told media at IFPI's London offices. "A lot of the analysis that we've done has shown us that certain genres and certain bands will inflect far faster than others," he went on to say citing specific research Universal has carried out into four of its artists, looking at one album for each act. Although Wells declined to reveal the identity of the four acts, he stated that "every single one of those bands has earned more money from its album being on Spotify than it has from being on any other services within a [set] period of time."
"Some of them haven't inflected yet," he continued, referring to the inflection point where digital revenues surpass physical, "but the trajectory - assuming zero growth on subscriber levels on any of these services - inflects within five years."
Asked about artists' and rights holders' continued opposition to streaming new releases on the grounds that it potentially harms record sales, Wells responded by saying, "that argument is absolutely bogus."
What we are seeing is that all these new services and new subscription packages are exploding without compromising or cannibalizing other revenue streams," he went on to say.
"[The reason] why this is so debated is that is it is a perceptional issue," added Edgar Berger, president and CEO, international, Sony Music Entertainment, who also spoke at the Digital Music Report launch. "Obviously, for streaming you get way less then you get for a download, but it streams so often and for such a long period then in the long run actually the money might be higher and it's incremental."
According to IFPI, the number of people subscribing to music streaming services leapt 64 percent to 13.4 million globally in 2011, up from 8.2 million the previous year. Digital music services, compromising streaming platforms, download stores and Internet radio stations, are now active in 58 countries - more than double the amount that were operational twelve months previously, says IFPI.