Spotify claims to have represented one out of every ten dollars record labels earned in the first quarter. This bombshell statistic came from Will Page, Spotify's director of economics, during his Music Biz presentation during the Music Biz Conference in Nashville on Tuesday (May 12).
Page's claim shows the speed at which subscription services are gaining share of the U.S. market. According to IFPI data, all subscription services accounted for 10.2 percent of U.S. recorded music revenue in 2014. If Spotify had a 10-percent share in the first quarter, it's safe to say the overall subscription share is well above the 10.2 percent registered last year.
Much of Page's presentation seemed aimed at Spotify skeptics in the audience. While explaining how streaming "is no longer an outlier in the business," Page noted Spotify has launched in 32 of the 37 countries where streaming is the primary digital source of revenue. Page also pointed out that Spotify is half of the $1.5 billion global subscription streaming market. In the U.S. market, Spotify made up approximately 90 percent of last year's growth in subscription revenue, according to Page.
Streaming has indeed come a long way. A person that attended the Music Biz conference -- then called NARM -- in the 2000s would have encountered much discussion on piracy. In those years, experts routinely warned conference attendees that, for example, an entire generation of music lovers was lost to piracy. One couldn't throw a stone without hitting an expert or executive fretting about massive music catalogs being stored on the hard drives of the future.
This was the climate into which Spotify launched in 2008. The service was originally pitched to labels as a legal alternative to piracy. Spotify was hardly alone here. Services such as SpiralFrog, Choruss and Ruckus had the same goal -- although they have long since passed.
But piracy isn't the problem it once was. The efforts of record labels and publishers killed many peer-to-peer and locker services. And services like Spotify have given consumers a good, legal alternatives to illegal downloading and streaming. Page didn't miss the opportunity to point out that this year's Music Biz conference doesn't have a panel on the topic of piracy. "Please, people, note that observation. Spotify is doing its job," said Page.
Some critics might not have been swayed, however. Page stayed away from the topic of per-stream royalties and artists' earnings from Spotify. The rate Spotify pays per stream -- about $0.005 per stream to record labels -- has attracted a great deal of criticism. The company's free listening tier, another source of criticism, also went unmentioned.