Another label leaves Spotify

Another metal label has announced a departure from Spotify, the super-popular, on-demand music streaming service with a huge catalog but tiny royalties for musicians and indie labels. Like Century Media and Prosthetic who previously left the service, Sumerian Records argues that the Spotify model is unsustainable and took to their Twitter to defend the move:

We rather be able to send our bands around the world on tour, make music videos and continue to support their careers and livelihood. Go to youTube if you want to hear all music. We are all about exposure but only major labels have equity in Spotify. All us metal labels will join forces and make our own so that our artists can still eat.

As the label correctly notes, Spotify is 18% owned by the big four three major labels. Indie artists receive no advance, receive no minimum per stream and only get a 50% share of ad revenue on a pro-rata basis which has been relatively inconsequential. At the same time, revenue for the labels is often "non-attributable" and so cannot be received by any artist and remains with the label. The simple way to understand this is to note that the artists catalog was the leverage which helped the label gain the 18% share of Spotify, but the label is the only beneficiary of the upside of the arrangement.

In the end, the argument may be whether the service is competing with CD sales or free downloads? Does Spotify keep you from buying music or does it keep you from downloading music illegally?