Originally Posted by Raygun
To put it short: The money Spotify distributes to the labels/producers/songwriters are based on the amount of money they get from subscriptions and then divided with the actual number of times a song has been played. In reality, the model probably is a little more complicated than that but this is the basic concept. If I've understood it correctly, the actual subscription fee is vital, not the income from advertising.
If that is genuinely how it works then they are f*cked.
I'm not paying for any music I don't own, for example, so I'm happy to support the ad-funded model only for stuff that I'm just going to stream. I know I'm not alone in that, friends and colleagues feel the same way. Their real money will still go to iTunes and CD stores, but Spotify fills a nice gap and also allows for better auditioning of stuff one *might* purchase later on.