Rdio, Spotify, Simfy, and Napster have seen about 200 recording labels pull their catalogs from the streaming music services because of a NPD Group and NARM study that said The recording labels are all part of ST Holdings, who owns all of the labels and decided that streaming music sites discourage album sales. So although 200 seems like a big number, it was one overseeing group that pulled the trigger on this.
“As a distributor we have to do what is best for our labels,” ST Holdings offered in a statement. “The majority of which do not want their music on such services. They provide poor revenue and have a detrimental [effect] on sales. Add to that, the feeling that their music loses its specialness by its exploitation as a low value/free commodity.”
"The survey helps to confirm a growing fear for many labels and artists. That is, services like Spotify increase access, but also decrease spending in many situations. Which means less money from higher-returning formats like iTunes downloads, CDs, and LPs," says Digital Music News, who published some infographics that make the data from the NARM study visual.
Check out more about steaming music sites in the Spacelab Streaming Music Guide.
So the big question right now on the web is: do streaming music sites do harm to music sales or are the labels who pull their music unable to cope with change in a trend-forward industry where change gets measured by the hour? Is this an overreaction or legitimate concern? Remember what happened the last time the music industry avoided change with the birth of Napster, it not only shot itself in the foot, but it ran out of bullets, reloaded the gun and started shooting itself in the foot again.
There have been other defections in recent months, but by and large they've been minor compared to those who stay onboard. Some big name exceptions include Cold Play and Tom Waits, as CNET points out. This could be labels who still see the music as a product, rather than part of a larger experience to sell to customers.
It's worth considering that streaming music sites are a modern replacement for FM radio, who never paid royalties for music, but nobody complained because FM radio airplay could expose a band to an audience. Compare that to streaming music sites, who actually pay royalties, and you've got an improvement on the old model. Then again, FM radio wasn't interactive, and didn't allow for selective playing of songs or albums. There were no Spotify playlists or Spotify premium membership equivalents in the FM radio world. FM was free and the playlist wasn't created by you.
It's also worth considering that the music industry always looks for a flavor-of-the-month cause to blame a decrease in album sales on, a long and storied history. When album sales go up, they want to think that it's because they're pushing good artists and good music, but when album sales go down, it's never their fault. Or consider that discretionary spending on entertainment is down because 1) it's tough economic times out there and 2) there's a huuuge amount of choices these days competing for spending: Netflix, iTunes, Amazon, Hulu, YouTube Video rental, free podcasts, free webcasts, bands that give away music ...
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