Spotify Vs Indie Labels
This week Spotify found itself under attack from indie labels, resulting in at least one of them (Century Media) taking their content off the music-streaming service. Their biggest criticism: Spotify pays next to nothing to independent labels. The owner of a New York-based independent label Mode Records, Brian Brandt, also shared that for 11,335 streams through Spotify they earned a meagre $36.98 (which still needs to be divided between composers and artists). In comparison, physical sales (which, according to Brian, still make up most of their sales) bring in $3-4 per sold CD. Thus, indendent label owners say in chorus, Spotify is destructive for their business. As Brian puts it: 'While the major labels and pop music may be able to reap a real income stream from Spotify simply due to the sheer volume of streams, the Spotify model is not financially sustainable for any indie niche label'.
As a response to the polemic attach, Spotify revealed some figures that show significant payouts to labels. '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,' read the company's statement, shares Music Ally.
On top of that: 'Spotify is now also the second single largest source of digital music revenue for labels in Europe [and] is currently the biggest single revenue source for the music industry in Scandinavia', Billboard reports. The company goes on pointing out their success in monetizing the audience that otherwise was downloading music illegally.
In addition, Spotify has already gained quite an audience in US, a mere month after launching their service there. Latest figures reported tell that Spotify's audience in US amounts to 1.4 million registered users, 750,000 of which are paying.
Thus, Spotify is starting to become an important music-discovery service, fighting which might do more harm than good to independent labels. As Brian Lowit, an owner of another independent label Lovitt Records told WashingtonCityPaper: 'I’m guessing someone looking for [Lovitt artists] on Spotify and not seeing it aren’t going to then go out and buy the MP3 or the CD because of it. They will just listen to something else. Hard to prove of course'.
True or not, this still adds to inpendent label's growing concern with streaming services, Spotify being the most notable example. Though the service is loved by millions and does a great job in many ways, indie records' vows are not without ground and deserve to be addressed.
Image by mitopencourseware
At Radical, we've taken a different approach. While other internet radio services make a symbolic nod toward independent artists by including a few tracks, Radical Indie provides a free, worldwide, full-featured, internet radio service dedicated fully to unsigned musicians and bands to showcase their music, without limitations. Radical Indie is now open for musicians to upload their music in advance of a launch later this year.
Radical Indie is a sister service of Radical.FM - check us out.
Read the press release – http://bit.ly/ocVp2N
Thanks for sharing the info!
Very nice article Anna. Actually I don't know if Mode Records is telling the truth though, as we don't have the Spotify's data to be able to compare them.
What is sure is that Mode Records got some attention, so for me it can also be just a marketing move to raise some attention.