Spotify Responds To Century Media Pullout, Another Label Joins Anti-Streaming Chorus

image from Earlier this week, metal and hardcore music group Century Media pulled its labels from Spotify "to protect the interests of their artists".  "Spotify in its present shape and form isn't the way forward," according to the company. "Physical sales are dropping drastically in all countries where Spotify is active."  Now Brian Brandt of contemporary classical and jazz label Mode Records (Cage, Feldman, Xenakis, others) has joined the anti-Spotify chorus and Spotify is responding to the controversy.

"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," according to Brandt. "As the industry moves more in this direction (competitor Napster, for example, only yields slightly more, about 1 cent per stream), it will simply choke the indie labels out of business."

Now Spotify responds to the controversy:

"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."

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  1. So, the question isn’t whether or not Spotify can make revenue for labels by converting “pirates” into “customers”, but rather whether labels are losing revenue by having those music consumers who are already customers, be “renters” at a fraction of a cent per play instead of “buyers” at $9.99 per album.

  2. It’s a shame to see indie labels clinging to dying business models. Opting out of Spotify will not somehow magically induce record sales, but will definitely cut off their artists from wider exposure. If I had signed with Century et al I would be pissed.

  3. “It’s a shame to see indie labels clinging to dying business models”
    Having your revenues brought down to zero can hardly be qualified as embracing a “new business model”

  4. We are not in the business of selling music anymore. Connection! Connection! Connection! We want to be like our favorite artists. We want their confidence, their swagger, their style. Make a connection with us then give us ways to express that connection. Whether that be clothes, accesories, video contests. As a fan I want to show people that I am part of a culture, part of a community. As an artist I want to lead one.

  5. I would like for Ghostwriter, or anyone, to name one label whose revenue has been “brought to zero” by a service that pays for usage. Because that would be truly amazing.

  6. I’d like for you (or anybody for that matter) to explain to me how being on Spotify gets you “wider exposure.”
    Bruce – maybe put this as an open question?
    Everybody keeps acting like Spotify is some discovery service – like somehow being on Spotify is going to get you discovered by somebody. I’d say it’s just another ocean you’re throwing a pebble into the bottom of. Seriously, the only mechanism for discovery is somebody accidentally stumbling across you whilst searching for something else, or recommendations from a friend via a direct link or a playlist they build.
    If you’re saying “discovery” is from the recommendations, then wouldn’t Facebook already have been this game-changer Spotify supposedly is? What about Soundcloud? Spotify is only different from those services in that it has less people, and it pays a few micro-fractions of a penny if somebody happens to stream your song.
    Everybody counters the crappy little payments with “but, it’s not about that, it’s about getting heard and making people come out to your shows.” Well if that’s the case, Facebook is better!
    Telling people they somehow have more of a chance of being “discovered” or even listened to once because they’re on Spotify might as well be telling them that if they pay $10,000 to rent the Whiskey out they’ll be discovered, signed to a huge record deal, and be issued a private jet.

  7. For all the artists I work with, I make all of their music available on YouTube, Soundcloud and all streaming services. Make it available to everyone and everywhere. This is THE NEW MARKETING PLAN for indie acts. It makes the fans the marketers sharing the music with their friends and family, in turn creating more fans and bringing more people to shows. Guess what happens when you bring people to shows? They purchase CDs directly from you. They purchase merchandise directly from you. Not to mention, they just paid to SEE YOU PERFORM.

  8. You don’t need streamers for fans to be the marketers. Word of mouth was around long before streaming.

  9. You want your music heard? You want to have it exposed to a larger listening audience. Pull up a chair at the Table. Showcasing Independent musicians is all we do. We were sent a Press Release on Spotify and were asked if we’d be interested in conducting an interview with them on the WITRR Network.
    We politely declined after reviewing their business model. While I like the pay per stream concept I like the personal approach we take at the Roundtable.

  10. Music was never for sale. Music was the catalyst that sold a huge mark-up on plastic cases, vinyl disks, and t-shirts etc. It seems to me, now that you can’t mark-up packaging anymore, that is what is killing the industry. Music sells things, not the other way around.

  11. As a music consumer I absolutely love Spotify. The other side of the deal is less lovely. I believe Spotify pays about .0004 cents per stream, which is basically the same as giving music away for free. If I want to give away my music for free I’d like to do it on my terms, and be able to change those terms as I wish.

  12. Spotify isn’t stopping people who use P2P from downloading files for free.
    Spotify is converting people who used to buy CDs or digital downloads into people who pay a one off subscription of £5 or £10 a month.
    Spotify may say they have given £100m to labels since they started, but I bet that £100m is less than the drop in physical/digital slaes revenues.
    Spotify is training people to NOT buy music, but stream it, and the maths don’t add up.
    blog post: Is Spotify Just Another Nail in The Coffin?. Obviously we think so, and in a few years it will be ditched by all but the Majors who have a share in it and are so money-blinded that they’ll snatch it from anywhere, including little old ladies having tea and cakes in the local community centre.
    REMEMBER: Spotify is TRAINING people to NOT buy music. Don’t witter on about it being a promotional tool. Your website is a promotional tool. You Tube is a promotional too. Facebook is a promotional too. They DON’T train people to NOT buy music.
    It beggars belief how people don’t see this.

  13. I’ve read all your comments, but the fact remains: spotify is awesome, and consumers love it. I love it. Of course I realize that it’s not bringing in huge profits for the record industry and that it isn’t the best way to discover new music. But music listeners love spotify, and in the end labels and musicians will go where the fans are going, and right now they’re migrating to spotify. It’s for that very same reason that Napster changed the music industry: consumers loved it, right or wrong they loved it. And now, if the people that keep musicians in business want to get their music on spotify, then musicians will follow them there.

  14. Yep, Spotify at the consumer end is amazing. I dread to think how many thousands and thousands of pounds I could have saved over the last 25 years if it had been around then.
    In fact, if it had been around for 25 years I could have listened to all the music I wanted and paid for in that time for £1500.
    So my personal investment in music of god knows how much would have been a fraction of it. And therein lies the economic fallacy of spotify. Sure, labels are chasing it at the moment, and sure consumers love it (why not, it’s an amazing deal), but it isn’t sustainable because it is doing more damage to record sales than P2P ever did or will (and remember the ‘industry’ figures of what P2P cost the business are fabricated and nonsense) and it is record sales that keep record labels in business.
    Do you think a fraction share of £100m will sustain these poorly run companies?
    Spotify will vanish, or the cost of it will rise and rise, or it will have limitations (ie you can listen to X amount of minutes even on a paid subscription) because in the end all the Biz cares about is money and Spotify will take away more than it makes.
    As I have postulated elsewhere, by the time that end comes it will be too late for the Biz because the expectation in music consumers is that you don’t buy CDs or Vinyl, you stream all music ever made for a limited fee.
    Those that jump ship early and build up a relationship with a fan base will survive because their fans (ie the fans who buy their bands’ music) will still be of the mind set that you consume that music through purchases. those that ride the rather limited gravy train of Spotify will have a fan base for their bands who expect to get it all for £60 a year and if they have to revert back to consumption they’ll be miffed and probably spend their money elsewhere.
    Enjoy Spotify mate. I even use it, I do. I use it to check out albums before buying them though because I love owning the physical product and where I can I buy vinyl. but we are also a small record label and we aren’t putting our bands on Spotify. In one way it may seem like cutting off our noses to spite our faces, but no-one will find our ‘small’ bands on spotify because the ‘recommend’ feature is sown up by the big boys and no-one writes info about the small bands (or rather copies over write ups from wikipedia), and even if they do find them, why would they buy the CD if they can listen to it for free?

  15. Yes remember anything less than 1 cent is ‘free’ no matter what spin they put on it.
    Oh and let’s not forget about inflation, it wont be long before we need 5 cents to buy what was 1 cents worth of stuff 🙁

  16. An Idea. Why not start a new subscription service where 100% of the procedes go to the artists. No labels. Just artists. I’m sure we can all get around this (except the labels). Email me if you want to help make this happen.

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