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Streaming Services Or Major Labels: Who's The Real Bad Guy?

Guest Post by Chris Robley on The DIY Musician

(Hypebot) – Since its launch, Spotify has paid out over two billion dollars to rights holders. That’s a hefty sum, especially considering they’re just one player in a streaming market that also includes YouTube, Rdio, Apple Music, and more.

Yet despite bringing in more than a billion dollars in 2014, Spotify saw losses growing faster than revenues. That same year, Pandora lost tens of millions of dollars. Clearly there’s money to be made from streaming. But there’s also money to be lost.

So what’s going on? Who’s gaining and who’s losing? Why is it that Spotify can claim to have paid out X amount for the streaming of a particular song while the artist claims to have received far less?

Matthew Ismael Ruiz, in an article called “Why the Major Labels are the Streaming Wars’ True Villains,” believes the discrepancies and confusion around streaming payments are actually the result of nefarious major label record contracts, as well as the fact that the majors were granted an ownership stake in Spotify and receive giant advances that are easily untethered from an accounting of specific streaming activity.

In other words, major labels benefit greatly by exploiting their catalog as a whole without sharing the profits with the individual artists who comprise that catalog.

For a closer look at how the deals are structured between Spotify and major labels, how royalties are generated and distributed, and how all of this affects independent rights holders, check out Ruiz’ article on Flavorwire.