More on Spotify

There has been some interesting comments floating around this week on Spotify after their appearance at The Great Escape …

So it looks highly likely that labels (and I’m presuming majors) have 30% equity in Spotify. In The Register, Andrew Orlowski rips into the service & Ek’s performance, I could quote but its worth reading in full – click here.

I’ve commented on Spotify’s viability before – I still don’t get it …

Again, its a good pice of kit, no need to subscribe then and the ads aren’t going to cover the royalty bill. Look at the numbers, Music Ally puts the figure at £100,000 per day in royalties at a rate of 9p per stream. So assuming that they have got that at half price (my arse) that’s an annual bill of over £18 million, rising to £36 million at full fat rate.

Here’s the music Ally quote …

But here’s a thought. The standard on-demand streaming payments to labels are around 0.8p per track per stream and PRS takes 0.022p per track per stream. So thats a total of 1p per stream. With 10m streams a day Spotify may be paying out GBP £100,000 a day in royalties. Given that it has been suggested that the majors all have equity in the company its possible that the labels might be extracting an unhealthy amount of royalties from the fledgling service which might eventually jeapordise the financial stability of the service.

How long will the last & what damage is this service doing to an already decimated industry with a long history of getting all theings Internet very wrong?


~ by donjenkins on May 21, 2009.

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