Calling the world's biggest streaming service a "villainous cabal of major labels," Joanna Newsom let Spotify have it in a recent interview with the Los Angeles Times. The respected singer-harpist-actress said the company is "built from the ground up" with the idea of helping labels avoid paying artists for their work.
"They can make their money from advertising and subscription, and [labels] don't have to pay their artists anything for that," she said. "So it's set up in a way that they can just rob their artists, and most of their artists have no way to fight it because they're contractually obligated to stay with the label for x amount of time and you can't really opt out."
Spotify says it pays out 70 percent of its gross revenue to rights holders, which includes labels, publishers and direct payments to independent artists. An artist’s share of that money could depend on what kind of deal they have in place. By calling Spotify a “cabal,” Newsom is likely referring to equity stakes that Spotify has issued to the majors and indie label group Merlin, which reportedly add up to as much as 20 percent of the company.
As if anticipating this latest slap from another dissatisfied artist (nothing will ever compare to Taylor Swift), Spotify’s Chief Revenue Officer Jeff Levick defended the service’s payment policy in an interview with Fairfax Media. Levick said Spotify’s billions of payouts to rights-holders is a “revenue line that was decreasing, not increasing.”
Levick argued that more and more artists are becoming aware of how Spotify’s “royalty flow” works, and that, as a result, they’re seeing fewer detractors like Swift or Newsom.
"The fact is, the music that we offer on Spotify is fully licensed from the labels; every stream generates a royalty flow back to the labels -- even on the free platform,” he said. ”I think that, like anything that's new, there's a lot of education and a lot of misunderstanding of the new way to do things. I think what you'll find is the list of those who aren't on board is greatly decreasing and the list of supporters is greatly increasing.”
He said Spotify’s goal is to have a “healthy revenue stream” for both the freemium and paid services. With the free option, “a royalty is generated every time someone listens to a song and our strategy to help pay for that is it being subsidized by advertising.”
Levick also said the company is looking to “accelerate our growth and accelerate our efforts around the world.” Part of that global strategy is expanding to more places in Asia, where it is currently operating in only six territories, including Taiwan and Hong Kong. TechCrunch is reporting that Japan and Indonesia are not far behind.
In Japan, the company is looking to hire a financial controller, “an important addition given the complexities of music licenses, and the relative nascency of music streaming” in CD-loving Japan, a source told the site. In Indonesia, Southeast Asia’s most populous nation, Spotify has hired a music editor and is said to be close to launching there.