Just read an interesting article here about electronic music distributor STHoldings pulling all its distributed labels from streaming music services Spotify, Simfy, Rdio and Napster. The reason for the pull: a recent study concluded that music streaming and other free or low cost online music services “are more likely to cause listeners to continue to stream songs, rather than buy them”.

ST’s clients include some 238 labels around the world.

This raises a huge question going forward, one we have touched on before: is Spotify good or bad for artists? The above study concluded that Spotify and other streaming services have the effect of devaluing music by exploiting it as a low value/free commodity, with the end result being less and less music being paid for, and of course, less money to artists.

The counter argument is that if more artists, labels, and consumers got on board with Spotify, there would be a snowball effect in the coming years, and far more revenue and value would accrue to artists from streaming vis-a-vis the rapidly dwindling revenue flowing from more traditional ‘purchase’ services such as iTunes.

As always, consumer choice will point the direction forward. And based on the numbers in the above study, consumers have made one thing clear: they want Spotify. The question is, do artists?

- Kurt Dahl, Nov. 16, 2011