Thursday 17 November 2011, 11:01 | By

Distributor pulls over 200 labels off streaming services

Digital

Spotify

So, the “does Spotify damage traditional record sales while delivering only nominal royalties” debate continues. If this debate goes on much longer we probably ought to find a snappier name for it. Plus this chapter involves services other that Spotify, but listing them all would make the debate title even longer.

Anyway, Dorset-based dance music distributor STHoldings has announced that it is pulling all content from 238 of the labels it represents off Spotify, Simfy, Rdio and Napster, leaving only four of their clients providing music to the subscription-based music platforms. The company claims that “these services cannibalise the revenues of more traditional digital services”.

In a statement, the distributor said: “Despite these services offering promotion to many millions of music listeners we have concerns that these services cannibalise the revenues of more traditional digital services. These concerns are confirmed in our own accounts and a recent study by NPD Group and NARM”. The statement included a link to Digital Music News’s analysis of said study.

It continued: “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’”.

The company said that all labels had been given the option to remain on Spotify, Simfy, Rdio and Napster, but only four “expressed that they would like to be on these services”.

Responding to ST Holdings’ statement, Team Spotify questioned the distributor’s interpretation of that there research undertaken for the US-based National Association Of Recording Merchandisers. A spokesman said: “Along with NARM, we’re confused by the way this research has been interpreted, since Spotify was not referenced anywhere in the research questionnaire and had only been live in the US for a matter of days when the study was carried out. The deck also makes absolutely no reference to Spotify and certainly does not draw any conclusions about Spotify, such as those made in the [Digital Music News] article”.

Of course, even if DMN and ST’s interpretation of the NARM research is questionable, the distributor would presumably point to its own stats, also published by DMN, which include the fact that, after adding their music to Spotify, ST labels combined saw quarterly digital revenues drop for the first time, 14% overall, and 24% in terms of iTunes revenue. The stats also reveal that subscription services accounted for 82% of content consumed, but just 2.6% of revenues, with Spotify paying £2500 into the distributor’s pot during those three months.

As previously reported, since Spotify’s launch in the US, various labels have taken their content off this and other streaming services, while some major league artists have chosen not to put their new albums onto streaming platforms, with many – officially or unofficially – expressing concern that servicing the streamers is having a negative impact on digital revenue overall. Of course, it’s very debatable whether recent digital fluctuations can be exclusively linked to the rise of Spotify et al, and even if it is, you could argue that short term decline may equal long term growth if you join the streaming service party.

Though, whatever you argue, as UK indie Hospital Records pointed out on Twitter yesterday, everyone should just be thankful services like Spotify efficiently take tracks off their platform if and when rights owners decide that route isn’t for them.

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