There's a lot of hype over music services lately, especially music streaming services. The interesting thing is that the hype isn't necessarily over the services themselves, but over the fact that this time some may actually succeed. Spotify is the prime example and the European free music streaming service has been heralded as the savior of the market and the way forward. There's just one problem, it may save, or rather create a market for free streaming services, it may even save the music industry but the artists still aren't getting paid.

Torrentfreak has an interesting story on how much do the actual artists make from streaming services more precisely from Spotify. Lady Gaga, one of the most popular artists on Spotify at the moment, made a whooping $167 (SEK 1150) by having her songs on the service. The sum came from the Swedish Performing Rights Society (STIM) as royalties for over one million streams of her hit song “Poker Face.”

Without knowing the exact details of her contract or the deals that the music labels have with Spotify, it can't be used as a general example. Still, it's safe to assume that most artists aren't making that much more. The labels would jump at the chance to claim that this is clear proof that free streaming services aren't working and that people need to pay subscriptions.

In fact, that is what they're forcing Spotify to do as it prepares to launch in the US. The launch has been pushed back as the service is negotiating with the labels to offer some sort of free service, but its beginning to look like Americans will get a severely impaired free streaming service if at all.

But here's the interesting part, free streaming services may not work but they don't work precisely because of the music labels which are asking for huge license fees every time a song is streamed. These fees have killed countless music services, most recently iMeem in the US, yet the artists still aren't making any money. The labels though say these fees are necessary for the music industry to survive and for artists to make a living. But if the music services aren't making any money, the artists aren't making any money and the users find it easier to just download the music illegally, it's clear that something has to change.

The four major music labels actually own a stake in Spotify, so maybe it they have a special deal with significantly lowered royalties which would explain the paltry sum. This doesn't seem to be the case though, as just last month Spotify's CEO Daniel Ek was asking the labels to start looking ahead and give up some of their demands in order to push the industry forward. Whatever the case, it's still obvious that the labels have no idea how to handle the situation and that if this carries on, the music industry, as we know it, may very well be heading for disaster.