Spotify defends payout norms after Taylor Swift withdraws music

Singer Taylor Swift performs on ABC's Good Morning America to promote her new album 1989 in New York, in this file photo taken Oct 30, 2014. Spotify's chief executive said Tuesday his company was on the side of musicians after popular US artist
Singer Taylor Swift performs on ABC's Good Morning America to promote her new album 1989 in New York, in this file photo taken Oct 30, 2014. Spotify's chief executive said Tuesday his company was on the side of musicians after popular US artist Taylor Swift withdrew her music from the online music service over a payments spat. -- PHOTO: REUTERS

STOCKHOLM (AFP) - Spotify's chief executive said Tuesday his company was on the side of musicians after popular US artist Taylor Swift withdrew her music from the online music service over a payments spat.

"Here's the thing I really want artists to understand: Our interests are totally aligned with yours," Daniel Ek, the founder of the world's largest online music service said in a blog post.

"Even if you don't believe that's our goal, look at our business. Our whole business is to maximise the value of your music."

Spotify and its competitors have come under fire from a number of global artists from Radiohead to ACDC who claim that streaming services pay too little to musicians and damage album sales.

And the company's latest dust-off with Taylor Swift just over a week ago, has added fuel to the criticism, particularly as sales of her latest album 1989 have boomed in the offline world.

Ek said Spotify was breathing life into the music industry by providing an alternative to free downloading websites.

"Piracy doesn't pay artists a penny - nothing, zilch, zero," he said.

"Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists" since 2008, he wrote.

"Spotify is the single biggest driver of growth in the music industry, the number one source of increasing revenue, and the first or second biggest source of overall music revenue in many places."

According to Spotify, almost 70 per cent of its turnover is paid out to the music industry.

Ek rejected criticism that his company pays too little, adding that 500,000 single listens to a song result in a payout of up to US$4,000 (S$5,170), which he argued is far beyond what radio stations pay in royalties for a similar number of listeners to a broadcasted song.

Spotify is not listed on the stock exchange and few details are available of its financial situation yet it appears not to have reached profitability.

The service has about 50 million active subscribers, most of whom listen for free with adverts between songs.

The Luxembourg holding company which owns 100 percent of the Swedish firm Spotify AB reported a loss of €3.08 million (S$4.9 million) in 2013.