Spotify has been accused of ripping off songwriters after it emerged that Lady Gaga received just £108 ($167) in royalties for over a million plays of her hit song Poker Face on the music streaming service.
The free and legal streaming service of Spotify has become a huge hit across Europe with over 7 million subscribers; the model is still pending release in the US market due to delays in copyright agreements.
The model is a simple one which works brilliantly for consumers. Listeners have the choice of streaming their music for free, but have to put up with interruptions every few tracks from advertising, or they can pay a monthly subscription fee of around £10 ($15) to receive their music advert free.
However, the model which has proven so popular with the public is receiving less than rave reviews from songwriters who complained of the “tiny” payments they received even from massively successful songs such as Lady Gaga’s Poker Face, Black Eyed Peas’ Boom Boom Pow and Flo Rida’s Right Round.
Provided Spotify gets the green light to be launched in the US by the end of the year, Swedish founder Daniel Ek believes Spotify will be streaming 36 billion songs by Christmas 2010, generating huge revenues for the entrepreneur, but not much at all for the music industry.
In related news, Last.fm silenced their music on demand service, outsourcing the feature to third-party services.
As has become the custom, music executives wailed that if online music services didn’t pay more money to artists then the future of the entire music industry was at risk of collapse. Spotify took a more reserved response and said that royalties from streaming would increase as more people signed up to its subscription services.