UMG Executive Defends Spotify, Claims Pandora Is Hurting Industry

Posted by on November 9, 2011


During an interview on Topspin CEO Ian Rogers’ This Week In Music web show, Universal Music Group’s head of Digital Business Rob Wells shared his take on today’s two leading online streaming services: Spotify and Pandora. While Wells heavily defended Spotify (though we could name a few metal labels who’d disagree), he was very critical of the internet radio servicePandora.

You can watch the entire interview in the video above, but here’s what Wells had to say in regards to Spotify:

“I’m a fan of [Spotify’s] model, I’m not just a fan of that company, although they’re all great guys, they’ve got great tech, great engineering, I mean the Facebook integration is amazing.  But I’m a fan of that model, and why am I a fan of that model?  Because that’s clearly what consumers – some consumers – want to do.

There’s massive debate raging throughout the whole of the industry about does it cannibalize, what are artists doing holding back from these services…but what if it’s incremental revenue and not cannibalistic revenue?  So this is all additional money.”

Wells went even further to show his support for Spotify by criticizing Coldplay’s recent decision to not make their new album Mylo Xyloto available for stream on the service, saying the following:

“I do find it quite irritating when bands decide they don’t want to do this… As an industry we should be showing some sort of solidarity, because there is a wave of customers – the demographic on these services is between 16 and 22-24 – and the disappointing thing about a band like Coldplay doing this is that consumers who are on these services are not going to turn away and buy that album on iTunes. They may miss out.”

While he saw a lot of promise in Spotify, Wells was less than enthusiastic about Pandora, saying the following:

“The disappointing thing with Pandora is that it’s a very dumb service, it’s a very passive service.  They kind of spoonfeed their consumers music…my view is they should have more to engage consumers especially in the opportunity of upsell.  They need to bolt on something like a premium subscription service, and then it’s interesting.

They’re doing something right, but I don’t think they’re doing the music or the recording industry any favors by doing what they do.  Yes they pass royalties, but if you ask any of the other business partners, who – with the exception of YouTube – who is cannibalizing their business, they’ll probably turn around and say Pandora.”

Pretty harsh words for Pandora. At the same time, we can see why he has such optimistic hopes for Spotify. As he mentions, while the revenue being brought in is slightly less, Spotify is still bringing in something when sales are at an all time low thanks to illegal downloading. Plus, we’d think the major labels would want to help Spotify out as much as possible considering the large payouts they likely received for streaming rights. Whether Pandora is truly less of an effective tool for labels is up for debate. You can watch the entire interview in the video above.

[via CMU Website and Digital Music News]

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