updated 02:10 pm EST, Tue November 15, 2011
ST Holdings says subscription music bad
Subscription music services faced more of a backlash after UK distributor ST Holdings stated that it would follow Coldplay's path and keep its labels' music out of subscription music services. All of the work its primarily electronic musicians, such as drum-and-bass artists like Blu Mar Ten, Cyantific, Makoto, and Mistabishi, was being pulled from flat-rate subscriptions on Napster, Rdio, Simfy, and Spotify. The company noted that its digital revenue had dropped for the first time ever, by 14 percent, and that much of the blame could be pinned on having its first full quarter supplying those services with music.
Revenue was disproportionately very low relative to the amount of listening. Although the four mentioned subscription services combined made up 82 percent of listens during the summer, they only accounted for 2.6 percent of revenue, ST Holdings said. As an example, there had been 750,000 total listens on Spotify, but Spotify paid just £2,500 ($3,960) in royalties.
The distributor added that the issue wouldn't have been as bad if it weren't that it was starting to "cannibalise" revenue from download-to-own stores. iTunes revenue from European Union countries dropped 24 percent in the summer as listeners chose the free option.
While it's not yet clear how broad the support is, it points to possible long-term trouble for services like Spotify. Their appeal is based primarily on the breadth of access and loses when key artists or whole labels pull out. Advocates have streaming have pointed to streaming discouraging piracy, but this model has only typically been useful when serving as an addition to sales and not a substitute.