It has been roughly one month now since Spotify has been available in the U.S. The service has so far met with great reception from users as the future of music delivery. However, there are signs now that may not be the case, at least where some industry professionals are concerned.
Spotify is a music service that has been widely available in Europe since 2008 but has just recently made its debut in the United States, which gives the user the ability to stream any song for free right on their desktop whether they already have it in their library (on their hard drive) or not.
Spotify also offers a premium service that gives users access to services such as streaming to their mobile phone and higher bitrate files, but the premium service is not required. Without paying a monthly fee, Spotify inserts advertisement to generate its revenue, leaving most of its functions, features and, most importantly, vast library of songs available for free.
However, the nature of Spotify’s free service seems to be leaving some of the smaller labels out in the cold. According to Helienne Lindvall of The Guardian, “indie labels…as opposed to the majors and Merlin members, receive no advance, receive no minimum per stream and only get a 50% share of ad revenue on a pro-rata basis.” That’s quite different than the deal Spotify has in place with the major labels.
One smaller label here in the U.S. has taken umbrage to the preferential treatment and have decided to pull almost their entire catalog from Spotify. Century Media and their affiliates have decided to pull everything from the service. Century — known for being the label of such metal/hard-rock bands as Lacuna Coil, God Forbid, Nevermore, Moonspell, Nightwish, and Strapping Young Lad, among others — cites a drastic drop in record sales in the areas where Spotify has launched as the reason for their action.
In its statement about the move, Century cited a pretty good reason for their decision: “While everyone at the label group believes in the ever changing possibilities of new technology and new ways of bringing music to the fans, Century Media is also of the opinion that Spotify in its present shape and form isn’t the way forward. The income streams to the artists are affected massively and therefore that accelerates the downward spiral, which eventually will lead to artists not being able to record music the way it should be recorded. Ultimately, in some cases, it will completely kill a lot of smaller bands that are already struggling to make ends meet.“
I will freely admit to using and loving Spotify. I think the service is great for discovering new music in that it features a dozen-plus albums that are released each week on their release day, from majors to indies. All kinds of genres and styles are represented. I’ve already discovered at least one band — iwrestledabearonce — that I hadn’t heard before and now like quite a bit as a result of hearing them on Spotify. And yes, I’m more than willing to pay to support smaller artists, like them, that I discover. That’s the joy of Spotify and something I’ve always been a proponent of — a way for the little guy to get over.
However, there’s a flip side to that coin, as we see from Century Media. Whether I’m in the minority when it comes to monetarily supporting smaller artists or if more people simply don’t even consider that aspect of their actions when it comes to the convenience of Spotify, smaller artists may not be getting as big of a cut from this deal as they should. The major labels are favored in a situation like this, and understandably so. It’d be a perfect world if everyone would venture outside the confines of corporate media and seek out great talents that don’t have millions of dollars in funding by conglomerates, but the fact of the matter is it’s simply easier and more convenient for people to gravitate toward the output of a major label. That’s where all the popular people hang out, and that’s where all the money is. The bulk of the music demand for any service like this is in the major labels — which own about 80 percent of the U.S. music market and around 70 percent worldwide — for that very reason.
By sheer numbers alone, then, Spotify has every reason to cater to the major labels. It’s served them well enough thus far to expand into a much bigger market. I just hope Spotify is careful enough not to neglect the smaller labels, as they often prove the most fertile grounds for discovering the future of music. Although, with more and more artists doing things on their own without a label at all, that could certainly be up for debate as well.