For some time, we've seen signs that top music performers feel on the spot with Spotify, worried that they are losing out financially as the industry shifts to a more streaming-centric business model. And last week's disclosure of a previous, now-expired licensing deal between Spotify and Sony gives them even more ammunition.
As reported by The Verge, the contract included a "most favored nation" clause, allowing for Sony to amend the terms with Spotify if other labels negotiated better deals.
As International Artists Association President Paul Pacifico said in a statement, "Labels are only required to fulfill the duty to the artist laid out in the contract that they sign and that contract is subject to the negotiation between two parties with vastly mismatched bargaining power."
In other words, the streaming deal guaranteed an upside for Sony — but not necessarily for artists, who may not even be aware that labels are profiting from renegotiated deal terms.
After the music industry's rough ride post-Napster, you'd think this would be a time for artists and labels to get along. According to the International Federation of the Phonographic Industry, revenue from subscription services rose 39 percent in 2014 to $1.6 billion.
The problem is that growth seems to be coming at the expense of digital downloads.
