It seems the labels might be to blame for fleecing artists
Alexandra Pollard

10:57 20th May 2015

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A leaked contract between Sony and Spotify seems to suggest that record labels are making far more money from streaming services than people realised.

Ever since streaming services such as Spotify began to gain traction a few years ago, critics have pointed out how little money the artists get paid each time their song is streamed.

However, according to a 2011 contract acquired by The Verge, it might be record labels - not streaming services - that are fleecing artists. The first surprising discovery is that Spotify paid a $25 million advance for the first two years of the contract.

On top of this, Sony were given $9 million of ad spots to sell on for profit, and 60% of the streaming revenue of their artists. As The Verge points 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."

One thing that remains unclear from the leaked contract is how much the artists are getting paid, either by Spotify or by Sony. It appears though, given that around 80% of Spotify's revenue has been given to its rights holders, that labels might be the bigger obstacle to artist repatriation.

As former CEO of eMusic and partner at Venrock David Pakman points out, "You can't squeeze blood from a stone. Your beef can't be with Spotify anymore."

Both Sony Music and Spotify declined to comment.

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Photo: Press/Spotify