updated 06:35 am EST, Mon January 30, 2012
Paul McGuinness little current benefit in Spotify
U2's manager Paul McGuinness has voiced his thoughts on the arrival of ad-driven online radio services exemplified by Spotify. While McGuinness was supportive of the concept, and can see it as a viable make-up of the way that music is distributed in the future, he still has serious reservations about it. The main problem, according to McGuiness, is that Spotify and the labels have not been transparent enough about the money generated by the services, and this has resulted in artist mistrust.
'Spotify has yet to become popular with artists because artists don't see the financial benefit of working with Spotify,' McGuinness told Digital Music Review. 'That's partly the fault of the labels, and the labels partly own Spotify. And there's insufficient transparency,' he added.
Further, because of this lack of transparency about the money generated by online music services, and who is benefitting from it, McGuinness holds the view that radio remains the best way for artists to make sales. 'At the moment I'm inclined to treat [Spotify] as promotional,' McGuiness contended. 'If we have to choose where to put records on their debut we're unlikely to give it to Spotify. I'd rather give it to a DJ on a great station.'
MOG chief David Hyman laid the blame for the lack of transparency solely at the feet of the labels. In November, Hyman went on the record implying that If a label paid an artist poorly, it was that label's responsibility to improve its internal relationship. Hyman argued that an average iTunes shopper also only bought about $40 in music every year, which amounts to just over $3 per month. He gave a estimate of about $6 per month in payout to labels from MOG that, in theory, was paying the artists more.
Conversely, STHoldings has backed out of free and subscription services, pointing out that it lost 14 percent in absolute revenue the very first quarter it tried services like Spotify. It suggested that the revenue wasn't as much as if it had just asked listeners to buy by the song or album from the 200 mostly electronic music labels that comprise its catalog. Whether that typifies the experience of all the labels remains unknown, and is something that remains a mystery to artists and managers like McGuinness.