Distributor Pulls 234 Labels From Spotify, Napster, Rdio After iTunes Payments Drop 24%

Independent music distributor ST Holdings has withdrawn all its music from streaming services, claiming they cannibalise revenue from sales.

The news emerged after drum and bass act Blu Mar Ten, who themselves removed their content from streaming services earlier this year, posted an announcement on their Facebook page revealing the move.

The announcement, billed as a “Word from our distributor about Spotify / Simfy / Rdio / Napster & all other streaming services”, read:

“’We have taken the decision to no longer provide content to any of the above streaming-type music services. This decision is based on the fact that the revenue from such services is negligible and these services cannibalise revenue from the likes of iTunes.’”

The announcement does not name their distributor but the band told Music Week it is ST Holdings, which describes itself as “a UK- based independent distributor, digital distributor and record label management company”, which specialises in “sourcing, manufacturing and supplying independent electronic music”.

The announcement goes on to list several stats from ST: in the third quarter of 2011 – the first full quarter in which the distributor supplied content to Spotify, Simfy, Rdio and Napster – ST’s digital revenue fell for the first time in its history, down 14%. iTunes revenue in the same quarter fell 24%.

Spotify, Simfy, Rdio and Napster accounted for 82% of all ST tracks ‘consumed’ in Q3 but only made up 2.6% of Q3 revenue. The announcement also revealed that Spotify paid £2,500 for 750,000 streams in the quarter.

“I can confirm that we have taken the decision to remove all ST Holdings-distributed content from the following music services, Spotify, Simfy, Rdio and Napster,” said ST owner Andrew Parkinson.

“Despite these services offering promotion to many millions of music listeners we have concerns that these services cannibalise the revenues of more traditional digital services. These concerns are confirmed in our own accounts and a recent study by NPD Group and NARM.”

The announcement has created some debate on the band’s Facebook page: Kirsty Hawkshaw, herself a singer and musician, posted, “I think if fans understood the stats and how important it is and how little money we earn these days they would invest in their artists more. Either that or it will be the age of Garage Band pop and nothing much else.”

However, Andrew Harvey, a fan of Blu Mar Ten, argued that Spotify had never stopped him from buying the band’s music on iTunes.

“In fact it’s introduced me to a lot of stuff that’s then led me on to purchase a hard copy or a download of an album etc,” he added. “But maybe… as it becomes more successful (to the point of changing people’s listening and purchasing habits) then the royalties it pays out have to be readdressed…”

“As a distributor we have to do what is best for our labels,” Parkinson told Music Week. “The majority do not want their music on such services because of the poor revenues and the detrimental effect on sales.

“Add to that, the feeling that their music loses its specialness by its exploitation as a low value/free commodity. Quoting one of our labels ‘Let’s keep the music special, fuck Spotify’.

“All the labels we represent have been given the choice to have their music to Spotify, Simfy, Rdio and Napster. As of today, from the 238 labels we distribute, four have expressed that they would like to be on these services.”

The news comes weeks after it was revealed that Coldplay’s new album Mylo Xyloto was not available on music streaming services, although the band’s label EMI did not give a reason why

Source: Music Week