Armageddon for Spotify? Not yet

First Coldplay and now 200 independent labels have decided to pull out of Spotify, Napster and Simfy. Not good news, but nobody panic.

Some recent headlines about Spotify and other music subscription services make it sound like Armageddon.

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But it's not, or not yet at least.

Several media outlets are reporting that 200 music labels are pulling out of Spotify. A Spotify representative was not immediately available for confirmation.

While the number 200 sounds like a lot, these are smallish independent dance labels from Great Britain that are highly unlikely to impact Spotify's business or bottom line in any meaningful way.

Spotify continues to offer music from the four major record companies as well as most of the large indies. The company, which launched a U.S. division this summer, still offers most of the music that people want to hear.

That said, this is not good news. This is a continuation of a trend that's been plaguing Spotify for well over a year now and is now starting to spill over onto other subscription services such as Rhapsody and Rdio.

And make no mistake, the artists rejecting Spotify aren't all little-known garage bands. CNET broke the news last month that Coldplay and Tom Waits would not distribute their most recent albums through Spotify.

Jim Donio (right), president of the National Association of Recording Merchandisers. Greg Sandoval/CNET

The major complaint of most of these artists is that Spotify simply doesn't compensate them enough.

This latest dustup with the dance labels began last week when the National Association of Recording Merchandisers (NARM) and research firm NPD group issued a study about digital music sales.

Somehow it got reported that Spotify and streaming music were hurting sales. NARM and NPD removed that report from public view on the Web, but nowhere in the report was Spotify accused of limiting sales. Jim Donio, NARM's president, declined to comment.

But that didn't stop the labels from pulling anyway.

 

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