A recent study conducted by the NPD group and NARM found that streaming music services like Spotify and Rdio were discouraging users from purchasing music. In response to that study, STHoldings pulled the music for almost all of its artists from all streaming services.
STHoldings is a distribution company that puts out electronic music like techno and dubstep. When the company saw the results of the study conducted by the NPD and NARM indicating streaming services were discouraging users from purchasing music, it immediately contacted the 238 labels it had on record and asked them if they wanted to keep their music on the streaming services. All but four wanted to remove their content from streaming services. STHoldings them pulled all of that music from Spotify, Napster, Simfy and Rdio.
STHoldings did release a statement about the move, which contained some strong words about Spotify from one label. According to Wired that statement originally read,
“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, fuck Spotify.’”
“Pleased to say we’re working with some streaming companies on solutions that work as well for artists as they do consumers.”
That indicates to me that STHoldings perhaps jumped the gun on pulling all of the music they distribute from streaming services. When asked for comment by Wired, a Spotify spokesperson said,
“We have strong support from the music industry, and of course respect the decision of any artist who chooses not to have their music on Spotify for whatever reason. We do however hope that they will change their minds, as the Spotify model is adding, and will continue to add, huge value to the music industry. Right now we have already convinced millions of consumers to pay for music again, to move away from downloading illegally and therefore generate real revenue for the music business.
In addition, ‘revenue per stream’ totally misses the point when considering the value generated by Spotify. The relevant metrics are: 1) how many people are being monetized by Spotify; 2) who these people are (usually young people previously on pirate services which generate nothing for artists and rightsholders); and 3) how much revenue per user Spotify generates for rightsholders.
Artists can — and do — receive very substantial revenues from Spotify, and as Spotify grows, these revenue streams will naturally continue to grow. Spotify is now the second single largest source of digital music revenue for labels in Europe (IFPI, April 2011) and we’ve driven more than $150 million of revenue to rights holders (ie whoever owns the music, be it artists, publishers or labels) since our launch three years ago.”
Spotify makes a strong point here that streaming services are actually helping to encourage people to purchase music again even if it is in a different form than the pay per track or pay per album model. Considering STHoldings updated the statement they made about streaming services, perhaps Spotify and other streaming services are making a strong case to the distributor about keeping their music on streaming services.
What do you think of the idea that streaming services are hurting music purchases? Do you think these types of services are decent ways to combat piracy even if they seem to diminish individual music purchases? Let us know in the comments.