Secretive licensing deals and "insufficient transparency" could scupper Spotify and other cloud-jukebox services, U2 manager Paul McGuinness has warned, suggesting that "we're unlikely to give [debut records] to Spotify" as the streaming music platform is more promotional than a money-spinner. McGuinness sees "the Spotify model" as part of the future of music, Digital Music News reports, but the supergroup manager also criticized confidentiality agreements between the service and labels as failing to show exactly what the benefits to musicians might be.
"Spotify has yet to become popular with artists because artists don't see the financial benefit of working with Spotify," McGuinness believes. "That's partly the fault of the labels, and the labels partly own Spotify." Details of exactly how much Spotify pays each label and each artist per play are closely guarded secrets, though previous leaks have suggested the balance is tipped decidedly in the direction of record labels.
According to insiders, Spotify and rivals like Rhapsody are forced to agree to huge upfront payments along with payout deals based on the biggest income of either minimum subscriber fees, per-play costs or total company revenue. Each label can insist on the best terms of all the negotiated deals their counterparts have arranged.
In the end, "damned by faint praise" seems the most apt description for the U2 manager's attitude toward Spotify and other streaming services. "I see no reason why the Spotify model should not be part of the future, it is essentially honest so it's to be encouraged. I'd like to see it adopted everywhere, quite honestly" he concluded. However, as to whether Spotify is "a means of monetizing distribution for product or is it promotional?" McGuinness asked himself, "at the moment I'm inclined to treat it as promotional. If we have to choose where to put records on their debut we're unlikely to give it to Spotify. I'd rather give it to a DJ on a great station."