Spotify to Lose Rights to Music from More than 200 Labels

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Spotify users may find themselves losing access to songs by independent labels, as a distributor representing 238 indie music publishers wants to pull out their content, not being satisfied with subscription-based licensing deals.

Spotify, and similar services like Rdio, MOG, Simfy and Napster, might find themselves losing access to a big part of their current music libraries. STHoldings, a distributor representing 238 music labels, has felt disturbed by a recent NPD Group and NARM study that says subscription services discourage consumers from purchasing albums and individual music tracks separately. The group has actually issued a strongly-worded statement that said they are doing this in the best interests of their labels.

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 because of the poor revenues and the 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.’

Note that we edited out the expletives.

Spotify has argued that artists do receive substantial revenues from the streaming service, and says more than $150 million has been distributed to rights holders — which include labels, song writers and artists. However, computing for music royalties and revenue from a streaming service is said to be very complicated and difficult, and the sentiment against Spotify seems to have stemmed from confusion with how revenues are paid out. This isn’t helped by the fact that Spotify is very secretive with its royalty discussions.

Subscription services offer cheaper access to music for consumers, who only need to pay a flat fee per month for streaming and mobile access. Most services offer ad-supported and free access from limited devices (such as desktop-only). But with music labels pulling out their content, does this signal that the end is near for the subscription-based business models? Will users have to stick with paying for music on a per-track basis? How about Google Music, which has recently launched, and with the support of the bigger music labels?