In four of its launch territories, Spotify is paying labels a share of its subscription and advertising revenues, rather than per-stream payments, according to UMG’s digital boss Rob Wells. That’s Sweden, Norway, Finland and France. In the UK and Spain, it’s still paying per stream, due to the high number of people using the free service there. “In all its territories bar two, Spotify pays the labels from a mixture of the money it generates from advertising revenues and subscriptions. That to me equates to a sustainable business model,” he tells the Telegraph. According to Wells, to make this model work, Spotify needs to convert 10-12% of its users in a territory into paying subscribers (hence the “lagging behind” in the UK and Spain). Wells also said that Spotify was UMGI’s fourth largest digital partner last year for revenues, which the Telegraph speculates puts it only behind YouTube, iTunes and one other.
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