Photo: Matt Lynley, Business Insider
Music distributor STHoldings has yanked songs from more than 200 of its record labels from Spotify over concerns that the service was not delivering enough money to record labels.NPD Group conducted a study that suggested subscription streaming music services like Rdio and Spotify are discouraging other forms of music buying. That didn’t go over too well with one record company, according to a report by Wired:
That prompted STHoldings, which focuses on techno, grime, dubstep and bass music, to contact the 238 labels that it has on its books to ask if they wanted it to keep distributing content to Spotify or withdraw it. Only four said they wanted to keep their content on Spotify
Here’s the actual statement from STHoldings on the decision:
As a distributor we have to do what is best for our labels. The majority of which do not want their music on such services. They provide poor revenue and have a detrimental affect on sales. Add to that, the feeling that their music loses its specialness by its exploitation as a low value/free commodity. Quoting one of our labels “Let’s keep the music special, f–k Spotify”
And here’s Spotify’s response, according to Wired:
We have strong support from the music industry, and of course respect the decision of any artist who chooses not to have their music on Spotify for whatever reason. We do however hope that they will change their minds, as the Spotify model is adding, and will continue to add, huge value to the music industry. Right now we have already convinced millions of consumers to pay for music again, to move away from downloading illegally and therefore generate real revenue for the music business.
In addition, ‘revenue per stream’ totally misses the point when considering the value generated by Spotify. The relevant metrics are: 1) how many people are being monetized by Spotify; 2) who these people are (usually young people previously on pirate services which generate nothing for artists and rights holders); and 3) how much revenue per user Spotify generates for rights holders.
Artists can — and do — receive very substantial revenues from Spotify, and as Spotify grows, these revenue streams will naturally continue to grow. Spotify is now the second single largest source of digital music revenue for labels in Europe (IFPI, April 2011) and we’ve driven more than $150 million of revenue to rights holders (ie whoever owns the music, be it artists, publishers or labels) since our launch three years ago.