Chief Daniel Ek defends Spotify model

SPOTIFY chief executive Daniel Ek has defended the company’s business strategy in a blog post.

FILE - In this Sept. 19, 2014 file photo, Taylor Swift arrives at the iHeart Radio Music Festival in Las Vegas. Swift is releasing her fifth album, “1989,” on Monday, Oct. 27, 2014. Spotify CEO Daniel Ek on Tuesday, Nov. 11, 2014 voiced disappointment that Swift pulled her music off the popular music streaming service, denying claims it's making money "on the backs of artists." (Photo by Andrew Estey/Invision/AP, File)

AFTER losing Taylor Swift’s entire music catalogue, Spotify chief executive Daniel Ek defended the company’s business strategy in a blog post Tuesday, and said the music streaming service is growing its user base.

“Taylor Swift is absolutely right: Music is art, art has real value, and artists deserve to be paid for it,” Mr Ek, who founded Spotify in 2006, said in the post. “When I hear stories about artists and songwriters who say they’ve seen little or no money from streaming and are naturally angry and frustrated, I’m really frustrated too,” he added.

In his post, Mr Ek said Spotify now has more than 50 million users, and 12.5 million of them are subscribers who pay about $US120 ($139) a year for unlimited access to Spotify’s music catalogue. Earlier this year, the company said it had 40 million users and 10 million paying subscribers.

Swift’s catalogue of music was pulled from the Spotify streaming service at the pop singer’s request last week, amid a dispute over her latest hit album, 1989.

Swift has been among the most popular artists on Spotify and her move sparked a renewed debate about the business model of Spotify and whether artists and music-rights holders get their fair share from the music-streaming business model.

Singer-songwriter Aloe Blacc wrote a column on the topic for Wired Magazine following Swift’s move, where he said the “abhorrently low rates” songwriters are paid by streaming services is “yet another indication” of artists’ work being devalued.

Several popular artists and bands have opted out of distributing their music on streaming services, including Coldplay and The Beatles.

“I, for one, can no longer stand on the sidelines and watch as the vast majority of songwriters are left out in the cold, while streaming company executives build their fortunes in stock options and bonuses on the back of our hard work,” Mr Blacc said in his column.

Defending Spotify’s contribution to artists and labels, Mr Ek said the company has paid more than $US2 billion to labels, publishers and collecting societies since the company launched its music streaming application in 2008.

Spotify pays out 70 per cent of its overall revenue to record labels and publishers, paying between US0.6c and US0.84c per stream. Spotify also has a free, ad-supported listening option.

“(If) that money isn’t flowing to the creative community in a timely and transparent way, that is a big problem,” Mr Ek said in his post.

The dust-up between artists and streaming services such as Spotify comes as streaming services appear to be shaking up the economics of the music industry. Streaming has been expanding rapidly, on Spotify as well as on rivals such as Apple’s Beats Music. At the same time, music download sales at Apple’s iTunes Store have dropped more than 13 per cent this year.