STHoldings stormed its way out of Spotify this week, leaving only a trail of choice words in its wake.
On Wednesday, the distributor boldly withdrew more than 200 of its record labels from Spotify, Rdio, Simfy and Napster, following the release of a study that cast the music subscription industry in a rather unfavorable light.
According to the research, carried out by NPD Group and NARM, cloud-based services like Spotify and Rdio deter consumers from purchasing music via other channels.
Amid concerns that these companies may “cannibalise the revenues of more traditional digital services,” STHoldings decided to withdraw its catalogue of more than 200 labels. In fact, of the 238 labels consulted on the decision, just four expressed a desire to remain with Spotify, et al.
“As a distributor we have to do what is best for our labels,” STHoldings explained, in a statement. “The majority of which do not want their music on such services because of the poor revenues and the detrimental affect on sales. Add to that the feeling that their music loses its specialness by its exploitation as a low value/free commodity.”
The distributor went on to quote one of its labels with a line that rhymes with “duck modify.” In comparatively subdued response, Spotify said it respects STHoldings’ decision, but still hopes that the labels “will change their minds.”
The Swedish company also contested STHoldings’ study-backed arguments against it, claiming that it has “already convinced millions of consumers to pay for music again,” and assuring that artists’ revenue streams will “continue to grow.”
Whoever made this decision must not realise that they just cut off their own leg as far as future business is concerned. It’s true that some people won’t buy music they can stream but if the labels that make up ST Holdings were already so successful that they could afford the loss of exposure then they wouldn’t be with the company.
Those labels have now lost the casual consumer who accidentally finds a great song, album or artist and decides to buy it of the strength of listening online. Spotify won’t miss them but they will miss out.