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Does Spotify Pay Major Labels More Than Indies?

LONDON (Hypebot) – The utopian dream of the Internet is that it makes artists equals. Each can have their music available on iTunes and have a webpage to call their own.

But do major label artists make more money per stream on Spotify than the indies like the xx?

New reports hint that this may be the case.

It's not that Lady Gaga may get paid more than an indie artist just because she's Lady Gaga. Rather, it's that the Universal Music Group – the label that backs her – was able to secure a better deal with Spotify than their indie counterparts.

Due to this, some indies have threatened to remove their music from the service.

Both Naxos, a music distributor and one of the world's largest record company in classical music, and ECM, a major publisher of both jazz and classical music, are warning Spotify that they will leave, New Affärer reports. These labels are upset over low revenue and can't figure out how the streaming rates are calculated.

Since Universal Music Group is the largest of the labels, they were able to use their leverage to negotiate a higher rate and demand large upfront payments.

The label also secured a minimum rate for the ad-funded version of Spotify.

"You can't blame Universal for securing the best deal possible. After all, it has a lot of leverage, being the world's biggest music group. Spotify would be a lot less successful without Universal artists such as Lady Gaga, Eminem and Black Eyed Peas," Helienne Lindvall writes. "I do, however, have an issue with a track by Lady Gaga earning more money for 100,000 streams than, for example, one by Adele or the xx, just because Gaga is signed to a major label."

In my opinion, yes, artists should be compensated the same. But, in this case, you can't blame Spotify, as it's the majors, not them, that are the cause of this. – Bruce Houghton