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Spotify Defends Business Model Following Taylor Swift Withdraw

Posted by: , 14:05 AEDT, Sun November 16, 2014

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Spotify says that it's business model is good for the music industry and that artists like Taylor Swift are benefiting from the music streaming platform
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Image/Photo Credit: Sorosh @ Flickr, CC

Spotify has defended its business model following the decision by Taylor Swift's label Big Machine to pull all of the singer's work from the streaming platform.

Swift, whose newest album "1989" is currently topping the charts, withdrew all of her previous work from Spotify last week. No official reason has yet been given for the removal, but Swift herself spoke out against "free music" in an op-ed piece for the Wall Street Journal back in July.

Spotify however has responded by outlining the contributions it has made to the music industry on a blog post by CEO Daniel Ek.

Ek starts by agreeing with Swift's assertions that music shouldn't be free by saying that "artists deserve to be paid for it". Ek backs up his support by highlighting the fact that Spotify has already paid $2 billion to music labels, with half of that coming in the last year alone.

Ek says that Spotify is competing and winning against piracy, and while labels and some artists may complain about the size of their royalty payments, Ek says this is money that they probably wouldn't have made. 

"... that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify," writes Ek.

Ek also highlights the increasing number of paid subscribers that Spotify now has, 12.5 million users who have chosen to pay, to counter claims that the free ad-supported plan does not lead to revenue for artists.

In fact, top artists like Taylor Swift receive on average $6 million per year from Spotify, Ek reveals.

Ek says that instead of comparing Spotify to other digital platforms, and accusing the service of cannibalising other legal options, Spotify should be compared to radio and other promotional platforms. Ek says that a top song on Spotify may get 500,000 ad-based listens, which may not pay out as much as 500,000 iTunes purchases, but it is equivalent to the number of listens that occur for the song on a popular radio station, listens which do not generate any revenue for the artist. The promotional effects of Spotify, says Ek, is also helping artists like Ed Sheeran and Ariana Grande to generate record sales.

Ek concludes by saying that Spotify is good for everyone involved. "We're not just streaming, we’re mainstreaming now, and that's good for music makers and music lovers around the world," says Ek.


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