After Century Media Records yesterday loudly pulled its content from streaming music service Spotify, another indie label head has publically come out against the popular new service. Brian Brandt, owner and operator of contemporary classical and jazz label Mode Records, posted his own anti-Spotify rationale on the blog NewMusicBox.org.
"New streaming services like Spotify… have the promise to squeeze smaller labels out of the picture," he writes, citing low payments again as an issue. Here's an excerpt:
"On a typical CD sold through a distributor (yes, still the bulk of our sales are wholesale), we may make a profit of $3-4 a unit. Already that is not much considering the total sales of a typical niche CD. Sales through iTunes or similar service can yield a similar profit. But this all gets turned on its head with the Spotify model. For example, in June 2011, Mode had a total of 11,335 streams through Spotify; our income was a whopping $36.98! A big individual seller that month, by composer Luciano Berio, was streamed 1,326 times through Spotify; our income $4.18. So, we earn about 1/3 of a penny per stream. And these meager amounts should be split with the artists and composers."
His point is that while larger acts and labels can profit through from streaming music costs by virtue of volume alone, smaller niche labels don't stand a chance, and the model will eventually squeeze such companies out of the business.
It raises an interesting question. Yes, the streaming model is going to be a challenge for smaller acts/labels. But if that's what customers and fans want, then should that be something to challenge? Granted, it's not even remotely clear that the streaming model will completely replace ownership. But if it does, should smaller artists and labels fight that, or should they find a way to adapt as well (such as through consolidation or some other tactic)?
It's an interesting discussion. We'd love to see your thoughts in the comments section below.