Over 200 labels pulled their music from Spotify, Napster, Rdio, and German music service, Simfy. A study from NPD and NARM shows that those who use streaming services buy less music; therefore, the revenues labels and artist receive are decreasing. Other services, such as YouTube, that provide free music also contribute to the problem. Researchers said "New sources of listening, watching, and researching make it even easier for the average music fan to avoid taking ‘high value’ action, e.g. paying either for a CD, download, or subscription.” ST Holdings Ltd., who represents the 200+ independent labels, said “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.” Sam Rosenthal, founder of Projekt Records, explains his problem with Spotify:
“For a stream on Spotfy…. NOW READ THIS CLOSELY….. on average $0.0013 is paid to Projekt’s Digital Distributor. 5000 plays generates around $6.50. In comparison, 5000 track downloads at iTunes generates $3487. To be clear: I am not suggesting that every stream would have been a sale at iTunes. Believe me, I understand the reality of the music business. This is just a comparison to make a point. Let’s look at this another way: To earn the U.S. monthly minimum wage – $1160 – 892,307 plays a month are needed at Spotify. This is not a viable number for artists.”
GigaOm points out that this issue affects the major labels like Sony, BMG, and Universal less than indie companies because they own a stake in Spotify. Yet Coldplay, who is on the EMI label, has refused to give Spotify streaming rights to their latest album, Mylo Xyloto.
