When Spotify came to the United States last year, not everyone in the music business was pleased with its economics. But slowly there has been a détente.
From the beginning, some artists and record companies have worried that Spotify’s royalty system, in which fractions of a penny are paid each time a song is streamed, would cannibalize more profitable download sales. Last year, Coldplay and Adele withheld their full albums, and some companies, like the independent metal label Century Media Group, pulled their catalogs entirely.
Announcing its decision least year, Century, whose acts include Andrew W.K., Lacuna Coil and Krisiun, said that Spotify’s payment system “accelerates the downward spiral” of the music industry, “which eventually will lead to artists not being able to record music the way it should be recorded.”
There are still some prominent holdouts, like the Black Keys. But lately more and more acts have been shaking hands with Spotify. Coldplay and Adele have both put their full albums up, and on Monday, Century said it was reversing its stance and would license its music to the service.
“We respect that music fans wanted to have instant access to our catalog via Spotify,” Don Robertson, Century’s president of North America, said a joint statement with Spotify. “But we also have to consider the rights of our artists. After practicing some due diligence, we’re moving ahead confident that both the artist and the fan are being fairly served by this developing platform.”
U.S. Indies Pressure Universal: A few days after the Universal Music Group made sweeping concessions in Europe as part of its $1.9 billion bid to take over EMI, an American group representing independent labels has called the Federal Trade Commission to block the deal on the grounds that no such remedies have been proposed in the United States.
The trade group, the American Association of Independent Music, or A2IM, has made brief statements opposing the merger. But on Monday its president, Rich Bengloff, condemned the deal in strong terms, noting that none of the $440 million in EMI divestments that Universal proposed to the European Commission were for assets in the United States:
With no divestitures or operating remedies proposed for the U.S. — the world’s largest music market and home to the vast majority of the technology companies who work with the music community — the negative impact on music consumers and emerging technology companies is clear. Such market concentration will diminish healthy competition, providing one dominant market leader damaging clout in terms of both consumer pricing and the means with which music is made available. The effect on both promotional access and monetization for independent music labels and artists is equally clear.
Universal’s proposed divestments represent about a quarter of EMI’s annual revenue around the world and two-thirds of its sales in Europe. The European Commission must rule on the deal by Sept. 27; the Federal Trade Commission has given no indication when it would make its decision.
Ben Sisario writes about the music industry. Follow @sisario on Twitter.
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