Why is music so powerful

Spotify: how powerful is the streaming service?

Wixen Music Publishing, which has licenses to songs like "Free Fallin" by Tom Petty and "Light My Fire" by The Doors, is mad at Spotify. Thousands of songs are said to have been used without paying royalties to wankers. That is why the US label has now filed a lawsuit demanding compensation of the equivalent of 125,000 euros for each song.

The number one player in the music streaming service market has been in trouble with record labels and artists before. Wixen's lawsuit follows on from a similar process in which Spotify agreed to pay $ 43 million in a settlement. This agreement has so far only been provisionally approved by the responsible US judge, a final confirmation is still pending. Wixen also skipped there and objected to the deal because it was inadequate.

In 2014, the American singer Taylor Swift and other artists spoke out against Spotify and in some cases no longer made their music available on the platform because, in their opinion, the group did not compensate artists fairly.

But the power and popularity of the top dog among streaming services are unbroken: In the summer, Spotify cracked the mark of 60 million paying users according to its own information. Founded in Sweden in 2006, the company is now valued at at least $ 19 billion. It is planning to go public this year.

How does Spotify work?

Spotify is a kind of digital lending library for music and meanwhile also podcasts, videos and audio books: users have access to millions of titles on their PC as well as on their smartphones and tablets. You can find them using the search function, listen to them and compile them into playlists. However, the titles cannot be downloaded.

To get started, users need to download the Spotify software and create an account. You can choose between a free and a premium version. With "Spotify Free", commercials are played between some songs and you can only listen to your playlists online. Another limitation is the shuffle mode: if you listen to a playlist or an artist, a Spotify algorithm decides which song comes next. Only six songs per hour can be skipped. Spotify Premium subscribers, on the other hand, can listen to their music in any order and without advertising for 9.99 euros a month, even without an Internet connection.

Spotify cooperates closely with Facebook: If you register with your Facebook account, you can see which tracks friends from the social network are listening to. At the beginning, a Facebook profile was even a requirement in order to be able to register with Spotify - after massive criticism from data protectionists, however, the streaming service lifted the Facebook compulsory in Germany.

More: Spotify knows which music you like - or does it?

How does Spotify work with artists?

The cooperation with musicians and songwriters mostly takes place through their music labels. On behalf of the Association of the French Music Industry (SNEP), auditors from Ernst & Young analyzed who received what portion of the 9.99 euros that a user pays monthly for a premium subscription. According to the study published in 2015, Spotify keeps a good 2 euros, 1.67 euros are due on taxes. 4.56 euros go to the music label, one euro to songwriters / composers. In the end, 68 cents remain for the musicians.

For every song called up by a premium user, a record company earns 0.2 to 0.3 cents, according to Holger Gechter from the German independent label Timezone. If a user of the free version listens to the song, the merits are, according to Gechter, "in the homeopathic field". He estimates the shares that the world's three largest music labels Sony, Warner and Universal receive from Spotify higher.

Critics accuse Spotify of exempting artists with the free basic tariff and of promoting the free culture that is already widespread. Gechter would also like "Spotify Free" to be abolished. Otherwise he is satisfied with the cooperation.

How has Spotify changed the music industry?

The fact that Spotify and similar streaming services are enjoying increasing popularity with music lovers can be explained by the fact that they represent a convenient and inexpensive alternative to illegal offers. In addition, unlike downloading, additional, valuable storage space is not used per song.

For the music industry, after 15 years of global downturn, Spotify & Co were hoping for new earning opportunities when they emerged. And despite the criticism of some business practices in recent years, this hope has at least partially been fulfilled. According to Florian Drücke, Chairman of the Board of the Federal Association of the Music Industry (BVMI), streaming has ensured significant growth - both on the international and on the German music market. In Germany it now has a share of 35 percent.

For professional artists, Spotify and its peers are a real way to make money these days. At least in Germany, however, the CD market has so far been larger. This is also confirmed by Gechter from Timezone: "For our artists, CD sales at concerts and in stores still play a bigger role." Pressures from BVMI sees legal music streaming as an "important new channel for music use", where the advantages for all parties outweigh.