Stop making cents

Spotify’s stateside launch offers 15 million tracks, but at whose expense?

Ownership is great, but access is the future.” That’s the takeaway message from Spotify founder Daniel Ek, speaking at the Brainstorm Tech conference in Aspen, Colorado, in July. The 28-year-old digital entrepreneur went on to explain how “people just want to have access to all the world’s music.”

Of course, most people would like a few other things as well – including artists, who are still trying to figure out how to live off their music in this digital age. But it’s hard not to be impressed by Spotify’s catalogue of 15 million recordings that consumers can stream for free. After nearly three years of providing “any track, any time, anywhere” to subscribers in the U.K. and other parts of Europe, the Swedish company made its debut in the states on July 14. According to Billboard magazine, Spotify netted 70,000 paid U.S. subscribers in its first week, while the number of free subscriptions is anyone’s guess.

So what sets Spotify apart from stateside counterparts MOG and Rhapsody? In terms of musical offerings, all three services let you listen to pretty much anything you can think of, on demand, with a handful of high-profile exceptions like the Beatles and Led Zeppelin. But where Spotify trumps the competition is the inclusion of its free basic plan, albeit one with advertising interruptions.

“Spotify just put a ‘Rising Stars of Country’ ad in the middle of listening to my own MP3s of Emperor,” says Kory Grow, senior editor at Revolver magazine, referring to the Norwegian death metal band whose Prometheus: The Discipline of Fire and Demise album is rarely mistaken for country. “There is so much wrong with that.”

Viewed from a recording artist’s perspective, the concerns become more serious. In 2009, a Swedish paper reported that Lady Gaga had received just $167 for a million plays. Spotify disputed the figure, insisting it’s a fraction of what the artist would actually have received. But even today, the company gives no indication of what that fraction may be. “We can’t reveal the details of our commercial agreements,” Spotify’s head of communications, Alison Bonny, says in an email.

In addition to its contracts with larger labels, Spotify licenses indie tracks through various “artist aggregators” like CD Baby and TuneCore. According to TuneCore’s Bryan Halpin, it’s an all-or-nothing proposition: “You will not be able to choose if you want your release streamed or not,” he explains. Then again, he adds, “you do get paid for streams, so all is not a total loss.”

So will the trickle of streaming revenue – along with the possibility of wider recognition – offset potential lost sales to fans who can listen to any track, any time, anywhere?

“We just try to look at the cup being half full,” says Tyler O’Malley of the Colorado Springs, Colo.-based artist management agency Scott O’Malley & Associates. “For younger artists, it can help give them some visibility.

“The cup half empty is that, with this streaming stuff, they’re literally breaking apart pennies.”