Will this be the end of Spotify?

ST Holdings, a music distributor that represents over 200 labels recently pulled its music from Spotify, Rdio, Napster and Simfy. They say that such services provide poor revenue and have a detrimental affect on sales and that the music loses its specialness by its exploitation as a low value/free commodity.

This was based on the research finding that:

“Spotify and similar access models are discouraging other forms of music purchasing – not encouraging them – according to a recently-released finding from NPD Group and NARM – according to Digital Music News

The announcement comes just as Spotify has begun to gained popularity in the U.S. thanks to a deal with Facebook.

They aren’t the first to pull out of the digital streaming business. A number of small, independent labels have done so, with recently bigger acts like Coldplay have declining to make new material available on Spotify.

Free exposure is an important factor in driving record sales – it’s an argument that labels made years ago with radio. Consumers already can take advantage of YouTube and Radio for free. It is these small labels that need the exposure that Spotify can offer.

Several artists have allowed downloading of their music for a donation (see examples here) with the hopes that people will buy more, and often having higher than average sales.

Spotify and its competitors still have most of the bigger independent labels, including more than 12,000 represented by  Merlin. For the time being, the majority of popular artists, both mainstream and indie, are available on Spotify.

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