Wall St Cheat Sheet: Artists Question Spotify’s Payment Structure

Artists Question Spotify’s Payment Structure
By Debbie Baratz
January 09, 2012

Some of the biggest music acts in the industry are saying no thanks to music streaming services such as Spotify. Why? The music just doesn’t sound that good.

Adele, Coldplay The Black Keys, and Tom Waits are some of the giants who are not making their albums available on Spotify. Users pay monthly fees between $5 to $10 to either listen to an unlimited amount of music or for free with advertisements; artists can earn money from these services each time one of their songs is played.

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Also causing problems from the Spotify artist revolt is the effect on music-industry executives. Prior to its July U.S. debut, Universal Music Group (VIV:FP), Sony Music Entertainment (NYSE:SNE), Warner Music Group and EMI Group, received large advance payments from,and equity stakes in Spotify. The labels don’t have control over which musical acts support Spotify, according to Ted Cohen, a former EMI digital chief.

Some musicians have contracts clauses giving them digital distribution controls and others just do what they want. According to Cohen, “If Lady Gaga doesn’t want her latest album on Spotify, her label will listen or she may get a creative flu or miss certain promotional appearances. A recording artist can be petulant.”

Excerpt courtesy Wall St Cheat Sheet: http://wallstcheatsheet.com/stocks/spotify.html/

Posted by Ted • Monday, January 9, 2012 .