STHoldings, the digital distibution company used by some of the biggest labels in grime, bass and dance music have stunned the industry by withdrawing their associated labels from Spotify, Napster and all legit music streaming services. In a statement on their website, the company said:
STHoldings can confirm that we have taken the decision to remove all STHoldings distributed content from the following music services, Spotify, Simfy, Rdio & Napster.
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
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 looses it’s specialness by it’s exploitation as a low value/free commodity. Quoting one of our labels “Let’s keep the music special, fuck Spotify”
All the labels we represent have been given the choice to have their music to Spotify, Simfy, Rdio & Napster. As of today (16.11.11) from the 238 labels we distribute, 4 have expressed that they would like to be on these services.
For a hint at why, consider that, according the famous (and famously dubious) Information Is Beautiful graph below, each play lands the label a tenth of a penny. Several labels chipped in to the debate, with Ben UFO writing on Twitter “when our distro allowed content on spotify digital revenue fell (and fell significantly) for the first time ever” while Tri Angle Records Tweeted “Gold Panda just told me he made 19 pence on Spotify last year. You can’t even buy a snickers bar with that!”
The recent ship-jumping is not the first instance of an indie label delivering a “Peace The Fuck Out” to a streaming service. Spotify’s brilliantly “meh”-y defence issued to the media in September, after LA metal label Prosthetic left, was based on three points: you can’t really measure the worth of Spotify on individual streams, they’ve already paid huge amounts to labels, and, anyway, they’re better at least than a Torrent site.
“Spotify does not sell streams, but access to music. Users pay for this access either via a subscription fee or with their ear time via the ad-supported service [just like commercial radio] – they do not pay per stream. In other words, Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view. Instead, one must look at the overall revenues that Spotify is generating, and how these revenues grow over time.
Spotify is generating serious revenues for rights holders, labels, publishers and the artists that they represent. We have paid over $100m to rights holders since our launch, and the overwhelming majority of our label partners are thrilled with the revenues we’re returning to them. Spotify is now the second single largest source of digital music revenue for labels in Europe, according to IFPI.
It is also important to note that Spotify was created as a better, more convenient alternative to piracy. Estimates suggest that around 95% of all music downloads are illegal. Spotify is now monetising an audience the large majority of whom were downloading illegally (and therefore not making a penny for the industry) before Spotify was available.”