From the point of view of the consumers Spotify has been the only music service out there that can really complete with piracy on the ease of use, the amount of music available and of course, the price. There have been some random grumbling especially from the old school artist front, but now a Swedish artist called Magnus Uggla launched a rather scathing attack on Spotify in his blog. Since my Swedish is nonexistent, I’m relying on the article in TorrentFreak for translation:
Writing on his blog he says that Spotify is a really incredible, fantastic service which offers everything – for free too. But, he writes, it’s too good to be true. Like thousands of other artists, Uggla’s work is available via Spotify and, due to involvement of the major labels and a lack of involvement from the local torrent site operators, he of course expects to get paid a reasonable amount. Not so.
Uggla says that when he received his first earnings statement from Spotify it became apparent that he “earned as much in six months as a BUSKER could earn in a day.” Ouch.
Understandably upset, Uggla raised the issue in a long discussion with Sony boss Hasse Breitholtz but came away feeling that he should trust in the man and the service.
Ouch indeed. What was the last straw for Uggla was the last week’s revelation of the large record labels being actual shareholders of Spotify.
When it launched in October 2008, Spotify publicized music rights deals with Sony BMG Music, Universal Music, Warner Music, EMI and Merlin.
Behind the scenes, these five music companies were at that time made shareholders in Spotify. Combined, the record companies paid just €8,800 for an 18 percent share of Spotify’s stock, according to financial filings obtained by Computer Sweden from the Trade Register of Luxembourg, where Spotify is registered. Investments made this July, nine months later, have put Spotify’s market value at €193 million.
- The Industry Standard
The feeling of betrayal here is kind of understandable, although maybe misdirected. After all, the record companies and the industry have been hammering home the message that the artists should be compensated for the work they do, no matter what. It’s easy to see this stance reeking of hypocricy, when it’s revealed that the same companies are involved in a service that some artists think pays them peanuts.
Oh, by the way, who is this Uggla guy anyway? Some half-amateur whiner who didn’t strike it rich with his first album and who is all butthurt about it. Well, no – Magnus Uggla has been in the business since the 70′s and he seems to be kind of a high profile artist in Sweden. Then again, a long history and high profile doesn’t always mean high airplay and sales in the current times, and there aren’t actually any hard facts over the ratio of plays vs. royalties Uggla got from Spotify. So, let’s just operate under the assumption that it was somehow considerably less than he’s used to getting from traditional sources.
Referring to the valuation, Uggla questions how this company can do so well – and comes to the conclusion that it’s at the artist’s expense. He says that Sony Music, after “suing the shit out of The Pirate Bay” is acting just like them by not paying the artists.
So, the situation developes and this whole debacle raises interesting questions. I don’t think Uggla will be the only old school artist who’ll be a bit miffed about the Spotify royalties now that we know the service is partly owned by the big record industry. If Spotify was more or less independent from the big industry, I don’t suppose that many artists would mind the small royalties, at least initially. Hey, it’s a little bit of money from a lot of people who haven’t brought in any money earlier. Now the labels, who should be the artists’ knights in shining armour, can be seen as making millions covertly without compensating the artists properly and maybe even eating into their “proper” album sales. Another interesting twist is that essentially all the independent artists and labels involved in Spotify are now making money for the big industry.
Then again, 18% of the stock divided by five doesn’t sound like a whole lot of actual decision power, but it helps to explain how Spotify’s been able to get such an extensive catalogue of music. Also, principles and the record company hypocricy aside, the streaming subscription based services are still the only way to effectively fight piracy right now, and the only way to get at least some money out of a demographic that wasn’t worth a dime earlier.
If an artist wants to pull his material out of a service like this out of a principle and settle for no money at all instead of little bit of money, that’s certainly his right. I would call that slightly stupid, but then again, principles hardly ever make that much sense. Then again, one might wonder if someone, who has been in the business for 30 years, might be a little set in his ways. The net has changed the rules, so keeping in control of every copy and second of airplay is impossible and one can’t expect radio-like royalties from all online services. Also I have this sneaking suspicion that there would be a whole lot of need to update the artist licencing contracts with the labels, both old and new ones.
The times are changing. Although I’ve said nice words about Spotify in here, it’s certainly not the all saving messiah of the music business – it’s just another great example of how the music distribution can work in the internet era. Nothing is perfect in the beginning and it takes a lot to hammer a century of extremely conservative business practice to fit into the new world.
Filed under: Online distribution by Herra Honkonen
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