Last week over 200 indie labels pulled their music from streaming services like Rdio and Spotify based on the premise that online streaming hurts sales and isn't bringing in adequate revenue to cover the offset. Now the streaming services are hitting back, telling Fast Company that they generate an incredible amount of money for rights holders, and if artists don't see it, they should blame the record companies. At issue is the way streaming royalties work: Mog CEO David Hyman explained that his company gives a percentage of its premium subscription fees to each label based upon the number of plays their roster receives. The labels distribute it based upon the agreements they have with each individual artist. If musicians aren't seeing that money, Hyman says, it's not his fault. "It's like a black hole... I have no control over it."
Spotify argues that to truly calculate the value of streaming services requires a look not just at the revenue coming in, but who it's coming in from. If users that were formerly pirating music are contributing to the kitty via a subscription service, that's all found money for artists and labels. Of course, neither viewpoint addresses the potential impact streaming services have on sales themselves, which is the real concern here, or whether any of the services will be finding new ways to incentivize the purchase of tunes from within their platforms. We'll be looking to see if Spotify's "new direction" addresses any of these issues on November 30th.