Can't stream? Won't stream

Coldplay are the latest act to give Spotify the cold shoulder. Adam Sherwin reports on a revolt rocking the industry

If the music industry agreed on one thing – and it rarely does – it was that the web streaming service Spotify was the future for a business ravaged by piracy. But Chris Martin has dealt a possibly fatal blow to that assumption after Coldplay refused to license their new album to Spotify, which now faces a revolt from some big artists.

EMI, Coldplay's record company, is said to be "embarrassed" after its star act declined to allow Spotify's ten million users to listen to Mylo Xyloto, the band's new album. EMI, whose music division could be sold today in a $1.5bn deal by owners Citgroup, negotiated a deal to license its music to Spotify, in which it also owns a stake of under 2 per cent.

The Swedish-founded, UK-headquartered Spotify has transformed the way music is listened to by fans since its 2008 launch. It lets users stream a catalogue of 15 million songs to their computers and mobile phones through a monthly subscription or listen via an advertising-supported free service.

With CD sales suffering a 40 per cent collapse since 2001, Spotify was hailed as one of a handful of legal digital services which could lure fans from pirate sites and restore industry revenues. But artists are in revolt after discovering they are receiving few royalties compared with CD sales, despite thousands of plays on Spotify. The service pays 0.085p per stream, which is split between the publisher and songwriters.

Coldplay declined to give a reason for their decision but it follows Adele's refusal to place her 21 album on Spotify. She has sold 10 million CDs and downloads this year, defying claims that albums could no longer sell in large volumes.

Tom Waits also joined the rebellion, declining to place his new Bad As Me album on Spotify, Rhapsody, Deezer and the MOG streaming services. Major catalogues such as those of The Beatles and Pink Floyd are also unavailable.

Jazz Summers, manager of The Verve and La Roux, said: "Everyone told La Roux they were listening to her album on Spotify. We looked at her royalties from thousands of plays and she basically got nothing. She said: 'Sod it, I'm taking it off. The royalties are barely enough to pay for a set of guitar strings.'"

With this increasing influence has come "arrogance", Mr Summers said. Spotify executives recently held a meeting with Britain's leading music managers and, after making a presentation, refused to take questions. "That went down badly," he said.

While snubbing Spotify, Coldplay gave rival iTunes exclusive plays of Mylo Xyloto and is promising those who make a £7.99 purchase on the Apple service a superior sound quality MP3. Amazon is selling the album, which has sold 150,000 copies so far this week in the UK, for a heavily discounted £3.99.

EMI said: "We always work with our artists and management on a case-by-case basis to deliver the best outcome."

Mark Mulligan, a digital music analyst, said: "Coldplay have made a business decision that they can generate more income and album sales through iTunes and Amazon. That is worth more to them than the widespread exposure to their music that Spotify offers. But few artists have the firepower to dictate terms to their record labels."

Like EMI, other major record labels – Warner, Sony and Universal – also purchased a stake in Spotify and that has become a source of conflict with their artists.

The artist revolt could escalate, warns the British Academy of Songwriters, Composers and Authors. Patrick Rackow, Basca chairman, said: " It's a great time to be a music fan – there are more sources of music than ever before, but this does not mean the artist should feel pressured into being ubiquitously present on all services."