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Classical:Next, day two: A Spotify spat

- 1 June 2013

A sharp division of opinion between major and independent labels over Spotify in particular emerged from a conference at Classical:Next on revenue from streaming.

The panel for Classical:Next’s discussion on music streaming (from left): Host Timothy Kotowich; William Hope, director of label relations, Spotify; Stephan Steigleder, director of digital media at Deutsche Grammophon; Jonathan Gruber, managing director of Ulysses Arts; and BIS chairman Robert von Bahr
Photo: Eric van Nieuwland

Robert von Bahr, chief executive of Sweden’s BIS Records and chairman of eclassical.com, said: ‘It is not a question of how much we are paid by streaming services, it’s a question of how these services cannibalise normal sales.’

One estimate was that in revenue terms it would take at least 100 streams of a work to equate to the income from one download.

He had no doubt that streaming was diminishing classical sales and he attacked the ‘nonsensical’ revenue model that paid rights owners as much for a 30-second work as a 40-minute one. ‘We are being discriminated against when it comes to payment.’

On eclassical.com there was a fairer system of charging for downloads by the second, he said.

However, Stephan Steigleder, director of digital media at Deutsche Grammophon, leapt to the defence of Spotify, whose advertising-supported revenue model has been much criticised by composers and small labels.

Recording buyers rarely spent more than 120 euros a year on music but a label could get that amount from Spotify for the equivalent of one user, he said.

Analysis of DG’s five most important markets suggested streaming was not cannibalising sales and may be boosting them, with people streaming tracks and then buying the album from which they came.

‘We need to take a longer perspective,’ he said, pointing out that Spotify launched in Germany just a year ago. ‘It [streaming] is about listening to music over and over again, and in that classical music has an advantage, because it is listened to for years.’

William Hope, Spotify’s director of label relations, pointed out that the service paid 70% of its revenue to rights owners, a total of $500m so far and growing rapidly. ‘We expect to pay out $500m in this year alone.’

Jonathan Gruber, managing director of Ulysses Arts, said he worried that streaming will eliminate the tendency for many collectors to buy recordings they never got round to playing ‒ a significant source of income, to which Mr von Bahr added: ‘Only 11% of CDs ever see the inside of a CD player.’

Mr Von Bahr said Spotify’s metadata and sound quality were very poor ‒ areas that Mr Hope said the company was working on.

Asked about Naxos’s decision to withhold recordings from Spotify for six months after release, Mr Hope said that was ‘a mistake and a missed opportunity’.

In answer to a question, Mr Steigleder said DG had no plans to start its own streaming service, to which Mr von Bahr responded acidly: ‘You don’t have to start your own streaming, you own Spotify.’

He claimed that major labels received special revenue terms in exchange for buying stakes in Spotify. Mr Steigleder denied DG’s equity stake in the service gave it any such advantage.

One Response to “Classical:Next, day two: A Spotify spat”

  1. [...] (download or stream? Read here about a discussion including heads of emusic and spotify) [...]

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