Since the launch of Spotify in the States, the twitterverse and blogospheres have been abuzz with the new platform. However, every week there is more Independent labels leaving the platform because they are unsatisfied with the sites payout structure. For a model like Spotify, the company must keep their labels happy with the payout structure if the idea is going to be a success for the music industry as well as the company. Yet, this has led some question whether the payout structure of a ‘freemium’ model may diminish the financial of the music. So far, Prosthetic Records, Metal Blade, and Mode have removed their music from the site and Century Media will now limit its presence on Spotify to music samplers.
In a recent Billboard article entitled “Century Media Scales Back Spotify Presence”, the label released a statement further explaining their decision to jump ship from the Spotify model for their independent artists. The statement explained that the ‘freemium’ model “in its present shape and form isn’t the way forward” and added their acts, “are depending on their income from selling music and it is our job to support them to do so.”
The fact is that the Spotify model may make sense for Major artists, yet has been unable to satisfy the independent labels and artists. In response to Labels jumping ship the company put out a statement saying they are “providing an alternative to piracy”. The company should have taken the opportunity to improve the benefits of the model, instead of essentially ignoring the leaving labels. In the digital age, multiple revenue streams are the secret to profitably. In the Billboard article, “Strength in Diversity”, Glenn Peoples explains that, “Diversification is paramount in the digital music era- labels simply can’t survive on digital music sales alone.” Until the company adjusts their payment structure or diversifies their revenue streams the site will not satisfy the needs of the independent industry and labels will continue to leave.