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Spotify row: artists threaten to sue labels over music streaming Spotify row: artists threaten to sue labels over music streaming
(about 2 hours later)
Proponents of music streaming as a viable business model often point to Scandinavia as proof. Sweden, the birth country of Spotify, saw music sales jump 13.8% in 2012 and 12% in the first half of 2013 – the turnaround in revenue is largely attributed to the streaming service. More than 10% of the population subscribes to Spotify and music streaming currently accounts for 70.5% of total revenues from recorded music. So how come Swedish artists are far from cheering?Proponents of music streaming as a viable business model often point to Scandinavia as proof. Sweden, the birth country of Spotify, saw music sales jump 13.8% in 2012 and 12% in the first half of 2013 – the turnaround in revenue is largely attributed to the streaming service. More than 10% of the population subscribes to Spotify and music streaming currently accounts for 70.5% of total revenues from recorded music. So how come Swedish artists are far from cheering?
A number of Swedish artists are threatening to sue Universal and Warner Music over the paltry royalties they get from people streaming their music. If record labels don't agree to increase the share of the royalties distributed to artists from services such as Spotify, the artists will start demanding that their music is removed from the service, says Swedish Musicians' Union lawyer Per Herrey.A number of Swedish artists are threatening to sue Universal and Warner Music over the paltry royalties they get from people streaming their music. If record labels don't agree to increase the share of the royalties distributed to artists from services such as Spotify, the artists will start demanding that their music is removed from the service, says Swedish Musicians' Union lawyer Per Herrey.
Artists that signed their record deals in the 1980s or earlier tend to be on a royalty split that gives them 6% to 10% of revenue from record sales. This split was on labels paying not only for the recording and marketing of a record, but also the physical manufacturing, distribution and "breakage" – and picking up the tab when the stores returned unsold goods. Despite having none of that expenditure when it comes to Spotify, some labels – including Universal and Warner Music – have applied the same split to music streaming as they do to vinyl and CD sales.Artists that signed their record deals in the 1980s or earlier tend to be on a royalty split that gives them 6% to 10% of revenue from record sales. This split was on labels paying not only for the recording and marketing of a record, but also the physical manufacturing, distribution and "breakage" – and picking up the tab when the stores returned unsold goods. Despite having none of that expenditure when it comes to Spotify, some labels – including Universal and Warner Music – have applied the same split to music streaming as they do to vinyl and CD sales.
Though the Spotify streaming rate fluctuates according to the revenue from advertising and subscriptions divided with consumer usage, this means that if the service pays an average of 0.5p per stream, these artists make no more than 0.05p from it – or, put another way, they make £500 for 1m streams, while the label pockets £4,500. Add to that the shares the labels own in Spotify and the money they stand to make if it goes public – and the "access fees" that digital services pay major labels in order to get access to their catalogues – it no wonder that the labels are hailing streaming as the future.Though the Spotify streaming rate fluctuates according to the revenue from advertising and subscriptions divided with consumer usage, this means that if the service pays an average of 0.5p per stream, these artists make no more than 0.05p from it – or, put another way, they make £500 for 1m streams, while the label pockets £4,500. Add to that the shares the labels own in Spotify and the money they stand to make if it goes public – and the "access fees" that digital services pay major labels in order to get access to their catalogues – it no wonder that the labels are hailing streaming as the future.
Herrey claims that Universal and Warner may not even have the right to post the music of some the union's members, as those artists' contracts are so old that they don't cover digital distribution and sales. Like the production company behind Eminem, the artists and Herrey maintain that digital licences should count as third-party licensing, which stipulates that revenue should be split 50/50 between the label and the artist.Herrey claims that Universal and Warner may not even have the right to post the music of some the union's members, as those artists' contracts are so old that they don't cover digital distribution and sales. Like the production company behind Eminem, the artists and Herrey maintain that digital licences should count as third-party licensing, which stipulates that revenue should be split 50/50 between the label and the artist.
It's worth pointing out that record sales had gone through the floor in Sweden before Spotify launched in 2008. The Swedes had fallen out of love with CDs, which, at about £15, are much more expensive than in the UK. Legal downloading never managed to get a foothold as, by the time iTunes launched illegal downloading, using sites such as Sweden's own The Pirate Bay, was widespread. This is why Spotify – and to a lesser extent WiMP – dominate music consumption there.It's worth pointing out that record sales had gone through the floor in Sweden before Spotify launched in 2008. The Swedes had fallen out of love with CDs, which, at about £15, are much more expensive than in the UK. Legal downloading never managed to get a foothold as, by the time iTunes launched illegal downloading, using sites such as Sweden's own The Pirate Bay, was widespread. This is why Spotify – and to a lesser extent WiMP – dominate music consumption there.
However, lopsided royalty splits are not just a problem for Swedish artists – the UK Musicians' Union stance tallies with the Swedes. "The record label isn't incurring the same kind of costs online as it does with physical retail," says MU assistant general secretary Horace Trubridge. "But labels have been screwed by piracy, so they insist on applying the same rules to digital as they do to physical."However, lopsided royalty splits are not just a problem for Swedish artists – the UK Musicians' Union stance tallies with the Swedes. "The record label isn't incurring the same kind of costs online as it does with physical retail," says MU assistant general secretary Horace Trubridge. "But labels have been screwed by piracy, so they insist on applying the same rules to digital as they do to physical."
Yet there is no guarantee all artists will come around to viewing Spotify the way the labels do, even if they succeed in forcing the labels to split the revenue equally with them. The Beggars Group (which includes XL Recordings) already splits royalties 50/50 with its artists – and yet some of its artist, such as Thom Yorke and David Byrne, have been vocal critics of the Spotify; Adele initially withheld her last album from the service. Yet there is no guarantee all artists will come around to viewing Spotify the way the labels do, even if they succeed in forcing the labels to split the revenue equally with them. The Beggars Group (which includes XL Recordings) already splits royalties 50/50 with its artists – and yet some of its artist, such as Thom Yorke and David Byrne, have been vocal critics of Spotify; Adele initially withheld her last album from the service.
Artists are not the only ones having issues with their share of Spotify revenue. Robert Ashcroft, chief executive of PRS for Music (which represents songwriters), has said he thinks writers and their publishers should get about the same as labels and artists for streaming, just as they do when it comes to radio royalties. Yet the labels get dive to six times more from Spotify – and more than 12 times what songwriters get from US streaming service Pandora. Artists are not the only ones having issues with their share of Spotify revenue. Robert Ashcroft, chief executive of PRS for Music (which represents songwriters), has said he thinks writers and their publishers should get about the same as labels and artists for streaming, just as they do when it comes to radio royalties. Yet the labels get five to six times more from Spotify – and more than 12 times what songwriters get from US streaming service Pandora.
The issue of Spotify revenue was raised at Swedish songwriters' convention Stim Music Expo this week. Composer Georg Riedel noted how flashy Spotify's Stockholm office was, saying his first thought when entering it was that the company must be making a shedload of money.The issue of Spotify revenue was raised at Swedish songwriters' convention Stim Music Expo this week. Composer Georg Riedel noted how flashy Spotify's Stockholm office was, saying his first thought when entering it was that the company must be making a shedload of money.
The same day as Swedish Musicians' Union announced the pending lawsuits, PRS's local equivalent, Stim, announced that after five years of arduous negotiations with YouTube it had finally signed a licensing deal with the company. This means record labels and artists, as well as songwriters, will finally be able to monetise YouTube streams in Sweden and across Europe. All YouTube deals are covered by non-disclosure agreements, so neither artists nor songwriters are privy to the terms. Stim says it hopes YouTube will represent a major revenue stream for songwriters, but if YouTube's US deals are anything to go by will pay a lot less than Spotify per stream.The same day as Swedish Musicians' Union announced the pending lawsuits, PRS's local equivalent, Stim, announced that after five years of arduous negotiations with YouTube it had finally signed a licensing deal with the company. This means record labels and artists, as well as songwriters, will finally be able to monetise YouTube streams in Sweden and across Europe. All YouTube deals are covered by non-disclosure agreements, so neither artists nor songwriters are privy to the terms. Stim says it hopes YouTube will represent a major revenue stream for songwriters, but if YouTube's US deals are anything to go by will pay a lot less than Spotify per stream.
This is another reason why it's unfair of artists to put all the blame on Spotify for the drop in income they've experienced. They should remember that at least they are able to choose if they want to be on Spotify or not, unlike user-generated services such as Grooveshark and YouTube (they can file endless takedown notices to try to prevent their music being on there, but for most artists that's a pointless game of Whack-a-Mole) – let alone unlicensed pirate sites. Grooveshark lacks licences with major labels such as Universal and with both the PRS and Stim, and YouTube takes a much bigger slice of the ad revenue than Spotify does.This is another reason why it's unfair of artists to put all the blame on Spotify for the drop in income they've experienced. They should remember that at least they are able to choose if they want to be on Spotify or not, unlike user-generated services such as Grooveshark and YouTube (they can file endless takedown notices to try to prevent their music being on there, but for most artists that's a pointless game of Whack-a-Mole) – let alone unlicensed pirate sites. Grooveshark lacks licences with major labels such as Universal and with both the PRS and Stim, and YouTube takes a much bigger slice of the ad revenue than Spotify does.
One of Sweden's most successful songwriters concludes: "If Sweden is used as a model for the future of the music industry, then we're all fucked."One of Sweden's most successful songwriters concludes: "If Sweden is used as a model for the future of the music industry, then we're all fucked."
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