I’m sure I’m not alone in thinking that Spotify is, in many ways, simply brilliant. Music at my fingertips. The music I want, when I want it. And most importantly of all, for free.

The question is how long it’s going to last. More than one voice in the babbling din of the internet has openly wondered how the likes of Spotify can ever hope to turn a profit, and for good reason. The vast server farms, all that bandwidth swallowed by hungry cheapskates – not to mention having to pay all those pesky musicians – it must cost an absolute fortune.

And I really do wonder where all the money is coming from, because Spotify’s advertising is  clearly about as effective as getting semi-conscious students to thrust leaflets into the path of psychotic rush-hour commuters. The phrase ‘doomed to failure’ springs to mind.

Okay, okay. The number of people signed up for the £10 a month Premium service must be, at least, into double figures by now, all lured by the promise of high-quality 320Kbits/sec music and the removal of all those ads, but I’m willing to bet that most are still perfectly happy to put up with listening to the same Crucial memory advert 48 times a day in exchange for free music. Would Sir care for a free lunch, or would he care to pay for a very slightly nicer one? The answer isn’t blowing in the wind, it’s scrawled in big red letters on a placard waving right in front of your face.

So, where does this leave the musicians, the life blood of Spotify? Well, to put it in Spotify’s own, cuddly prose:

“We respect creativity and believe in fairly compensating artists for their work. We’ve cleared the rights to use the music you’ll listen to in Spotify.”

Ah, great. Well, that’s my conscience salved. All those ‘fairly compensated” artists are probably off sniffing up their profits on a 300ft yacht moored somewhere off the coast of Barbados. Hurrah for Spotify, saviour of music.

Back in the real world, it seems the artists earnings aren’t in such great shape. Indeed,  going by the postings of one Norwegian artist, Stein Tore, over at Gearslutz.com, the haunt of musicians and producers worldwide, Spotify’s definition of fair compensation is debatable:

“I have some minor releases available on both Spotify and iTunes. Here are the numbers for a given period, you decide what is best. BTW, I’m both the artist and record company, so there is no-one besides my digital distributor who gets a cut before I do.

Spotify: 1,793 plays = approx $1

iTunes: 2 complete albums, 14 individual songs: $21″

You read that right. Nearly 2,000 plays of a track on Spotify earn the artist around a dollar. Yes, a whole dollar. Going by the fact that even Coldplay’s Myspace page racks up little more than 8,000 plays per day, then my sub-GCSE maths tells me they’d, ooh, barely make $1,400  a year. Just think, after a year, Chris would have just enough to buy Gwyneth a couple of pairs of designer shoes and an extra large bag of lentils. Thank you, Spotify.

Guerilla advertising

Lady Gaga is another artist who, on the face of it, seems equally unlikely to be sending a Christmas card Spotify’s way. Spotify’s guerilla advertising regularly interrupted my favourite albums to herald the release of her track, Poker Face, and up to that point I hadn’t the faintest idea who she was. But months later, and despite the successful marketing campaign leading to over a million plays of said hit track, Spotify allegedly sent her a cheque for around $167.

There’s a fatal flaw in this line of thinking, however, and that’s because Spotify is essentially radio evolved. Artists aren’t ever going to turn a profit from radio play alone, but it’s more than worth it for the valuable advertising it provides. Lady Gaga is a good example. A no-name wannabe one minute, and adorning the charts worldwide the next – services such as Spotify serve a useful purpose for big labels wishing to push their latest cash cow into the limelight.

But while the big labels don’t seem too bothered – after all, any publicity is good publicity – the smaller record labels and bands are seemingly abandoning Spotify, mere months after uploading their catalogue of releases. Indeed, for the last couple of months or so, the PC Pro labs have been vibrating to the tune of Burial, Zomby, Kode 9, Flying Lotus and a whole host of others thanks to the presence of Hyperdub, a small but beautifully formed London-based record label. As of a couple of weeks ago, the Labs lay silent. Hyperdub had, presumably, withdrawn its entire catalogue.

Marcus Scott of Hyperdub told a different story however:

“We asked not to go on Spotify but we got put on there anyway. It took ages for us to get the music off… Spotify isn’t something we want to be part of, and the idea that new is better is a fallacy really, we prefer autonomy to pointless overexposure.”

It isn’t just smaller labels who’ve found themselves consumed by Spotify either. Robert Fripp, guitarist with the cult band King Crimson gave a withering rebuttal to Spotify’s claims of legitimacy:

“Spotify put up KC music without asking us; ie without clearing the rights (and later withdrawn). Spotify has yet to explain to us who gave them rights in the first place (this is simple for us as I own / control all of them); or why it assumed it might have had rights.”

In a statement sent to PC Pro, Spotify said:

“We ensure that all music on Spotify is licensed via labels, aggregators and publishers who guarantee that they have the rights to the content. In an age of piracy where music is available illegally online, all music on Spotify is legitimately and legally obtained and made available to users. With regards payments made to artists through the various rights holders (labels, aggregators, publishers), we aren’t able to comment on confidential agreements.”

Long-term future?

It’s not that I personally don’t want Spotify to endure, I do. Its survival is very much in my interests as a consumer, and particularly as an avid consumer of all things free. But although Spotify has been lauded as combating piracy and steering those evil file-sharers onto the straight and narrow, I can’t help feeling that Spotify’s intentions aren’t entirely altruistic.

The glaring issue is that the Big Four have a vested interest in Spotify’ success. For reportedly measly sums, Sony BMG, Universal Music, Warner Music and EMI bought themselves a 5.8%, 4.8%, 3.8% and a  1.9% stake in the streaming service. No-one knows what the terms of the deal between Spotify and the Big Four actually is, but it’s reasonable to assume that reduced or non-existent royalty rates are probably part of it.

Crippling Spotify with obscene royalty payments might be the last thing on their mind, but it’s a dormant threat nonetheless. Should the music companies finally decide that Spotify isn’t the future of online music, they could beat it to death with a frighteningly large royalty stick in next to no time at all.

And while the music industry objects to the idea that piracy boosts  music sales, its collusion with Spotify seems to covertly admit as much. After all, what could be better than something that offers most of the benefits of piracy – free music – and takes away the downsides – having to faff with frequently virus-laden torrents which take anything from minutes to days to complete?

Spotify seems a prime candidate to fill the void left by quitting the high seas of piracy: easy, instant access to the music you want, for free, and with all the music you want, not just those which are popular enough to be uploaded.

I know that, for my sins, I haven’t illegally downloaded a single track since Spotify was released. I’ve bought a handful of CDs, downloaded the odd album  in lossless FLAC format from Bleep.com, and lovingly assembled a sizable pile of bizarre, eosteric charity shop vinyl, but the thought of stealing music just hasn’t crossed my mind. And perhaps that’s the point. The music industry was never opposed to the idea of trying before you buy, but it simply wanted to wrest control from the pirates. Now, with Spotify’s user base reaching into the millions, maybe it’s got its wish.