[roadsweeper]

Ok, I have been trying to find a decent answer for this for some time now but still haven't found one that satisfies me. People are saying that Spotify is a great new idea that benefits the record industry. I just don't see how. I'm assuming that it works in the same kind of way that radio stations operate where a section of their playlist is analysed and the appropriate people paid by the relevant royalty associations for that country. But with a site like Spotify which is growing at an exponential rate, surely these royalties would be in the billions. Therefore, who is paying for these royalties? It's not the consumer and advertising income would not come anywhere near paying that. Also, with this method, only the songwriter gets the royalties because in the old days it was assumed that people would go out and buy the cd/vinyl/tape when they heard it on the radio which would therefore gain income for the recording artists/producers etc.
I understand that Spotify have contracts with record labels but surely the cost of these contracts cannot come close to being sufficient in respect to the quantity of music being contracted. I understand that this may be ok for artists from the 60's/70's as a lot of money will already have been made from album sales. But what about new music? If the industry progresses in the way that is predicted then no-one will be buying albums anymore.

So where does the record industry (this includes us, engineers, producers etc.) get it's money from? Or is it just a bit better than having our work stolen by millions and we are just rolling over and succumbing to the fact that our work is considered to be almost valueless?