After being slammed by two different indie labels for what they consider to be paltry streaming payments, Century Media and Mode Records, Spotify today responded in a statement that highlights the positive contributions it makes to the music industry overall.
“We are sorry that Century Media have opted not to offer its music to their fans through Spotify. Spotify has one of the biggest music libraries in the world – of over 15 million tracks – and is committed to offering our users the widest possible selection of music across artists and genres from around the world.
“Spotify was launched out of a desire to develop a better, more convenient and legal alternative to music piracy. Spotify now monetises an audience the large majority of whom were downloading illegally (and therefore not making any money for the industry) before Spotify was available.
“Spotify is now generating serious revenues for rights holders; since our launch just three years ago, we have paid over $100 million to labels and publishers, who, in turn, pass this on to the artists, composers and authors they represent. Indeed, a top Swedish music executive was recently quoted as saying that Spotify is currently the biggest single revenue source for the music industry in Scandinavia.
“Spotify is now also the second single largest source of digital music revenue for labels in Europe (IFPI, Apr 2011). Billboard reported in April that Spotify territories saw an average digital growth rate of 43% last year. By contrast, neighbouring countries (without Spotify) saw only 9.3% digital growth.
“We are very proud of the positive contribution that Spotify makes towards growth in the music industry.”
This certainly won’t be the end of the argument. And as this plays out over the coming months and years, more numbers and stats will be thrown our way. A few things to keep in mind as this progresses:
– Quoting the amount made from streams of a given song in a given timeframe isn’t exactly the most accurate way to value the difference between the streaming vs. downloading model. One would have to value the cost-per-stream over the lifetime of that fan for a true comparison. If a fan plays a given song hundreds of times in their lifetime, is the cost per stream in total more or less than the one-time, 99-cent download?
– Also, the cost-per-stream differs depending on whether the track was played under the free Spotify tier or the premium tier, with more going back to labels under the latter. Also, there are different rights associated with different markets internationally. What one rightsholder receives may not be the total payout of a given track’s earnings, but rather just the portion that one rightsholder was due.
– Who’s to say that a free listen on Spotify didn’t result in a full purchase on iTunes or even the CD? That’s impossible to track.