Sony Music and Spotify
lets face it over the past few years the music industry had been somewhat of a mess as artists, record labels and streaming sites try and find the best way to continue building there business in to the future. now things are getting even more convoluted with some artists using streaming sites to make there music available to the public and other artists like Thom Yorke calling Spotify “the last desperate fart of a dying corpse”. Love it or hate it streaming has allowed artists to bypass record labels and releases there music without any backing for very little money.
What Was Sony Music’s Deal With Spotify ?
In January 2011 sony music and Spotify drew up a contract giving Spotify permission to use sony’s music catalog for two years with an optional third year. in return for the use of sony’s back catalog Spotify had to pay yearly advances to sony. But with in the contract is stipulated that the advance must be paid in instalments every three months. So in the end Spotify ended up paying a $25 million advance for the two years of the contract. that was $9 million for the first year and $16 million for the second, and the optional third year would cost them $17.5 million. In addition to all this Spotify was also contracted to give sony music free ad space this would cost Spotify a total of $9 million of loss in add space revenue. In the first year sony had $2.5 million worth of free add space in the second year this went up to $3 million and $3.5 million in the subsequent years.
So How Much Did Sony Make From Streaming ?
As The Verge pointed out, “If Spotify earned $100 million in gross revenue, the labels would would get $60 million. If Sony Music made up 20 percent of the streams, it would take home $12 million.”