The Issue Over Major Label Spotify Stakes

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What’s wrong with the majors carrying an equity stake in Spotify?

Earlier this month, paperwork indicated that the major labels – along with independent consortium Merlin – hold a 17.3 percent share in the company.  Discussion has been bubbling ever since, shifting most recently towards artist compensation problems and the potential marginalization of smaller acts.  “On Spotify, it seems, artists are not equal,” Guardian writer Helienne Lindvall recently declared, citing the modest payments that most performers are currently receiving.

Lindvall references some unchecked facts in the argument, though few would argue that artist payouts are hefty.  Just recently, Swedish artist Magnus Uggla removed his music from the service, citing the meager earnings and questionable accounting at Sony Music Entertainment.

But is this a problem unique to Spotify, or the latest episode of a backlash against the service?  The reality is that most artists (and managers and labels) earn very little from digital formats, though plenty of problems surround proper payouts to artists.  According to attorneys speaking over the years to Digital Music News, messy major label accounting on unlimited platforms has been a hallmark since the early days of Rhapsody.

How this all ties into the issue of ownership stakes is also a bit murky – after all, majors are a huge and critical supplier of content.  And, inside the industry, independent music is often viewed as being larger than it actually is.  Most consumers want hits and big artists, whether new or catalog, and majors still carry serious firepower when it comes to content.   But whether any of that can be seriously monetized is a real issue, and until that happens, everyone is likely to remain pissed off.

Paul Resnikoff, Publisher.