UMG Responds: The Notion That Spotify Cannibalizes Sales Is “Totally Bogus…”

It’s one of the sharpest statements yet from a major label executive. And it comes just as a growing number of bands are withholding their content from Spotify, on the grounds that it directly cannibalizes discrete album and singles purchases from places like iTunes.   “That argument is totally bogus,” Universal Music Group head of digital Rob Wells told an audience in London, as reported by Billboard.

Don’t tell that to Coldplay, Adele, or the Black Keys, but Wells pointed to six months worth of data to defend his assertion.  “We’ve done an awful lot of analysis over the last six months in terms of value to individual artists and specific genres from subscription services around the world and specifically through the model of payment, comparative to other modes and methods of consumption,” the executive continued.  “Every single one of those [studied] bands has earned more money from its album being on Spotify than it has from being on any other services within a [set] period of time.”

The Black Keys are the latest to bail, citing cannibalization as a major reason.  But they also noted that major labels have a lot more to gain from Spotify than artists, an assertion that is backed by lopsided deal structures.  In the case of UMG, the label has not only reaped huge upfront licensing fees from Spotify, but they also carry a stake in the company. “There’s a lot of stuff about some of these services that people don’t really know,” the Keys’ Patrick Carney stated in December.  “It’s set up to be little more fair for the labels than it is for the artists, and that’s why we made that decision.”

 

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