This week’s heated debate between musicians and fans all over Internet forums was reminiscent of the old Napster days. This time, though, the digital music sharing start-up in question--Spotify--hasn’t broken any rules. But that doesn’t mean musicians are happy about the way things are, well, playing out.

The problem? Artists claim Spotify doesn't pay them enough.

The claim, however, isn't entirely accurate--at least according to one record label executive. “Spotify doesn’t pay artists, [it] pay[s] labels,” Merlin record label CEO Charles Caldas told in an interview.

Merlin currently receives payments from Spotify for its 10,000-plus indie labels on the service, reporting a revenue growth of 250% in the last year alone.

Artists do get paid when their music is shared on Spotify, but Caldas says the problem is how long it takes to get paid. The lag-time between when the label gets the money and when it trickles down to the artist is the ultimate flaw, he told, and the reason musicians like David Lowery are writing seething reviews about these types of online sharing options.

“Chances are, you [the artist] are getting reporting quarterly, or six-monthly, on sales that happened six months ago, so what you’re seeing in your royalty statements could be a year old,” Caldas told “You’re not seeing the service the way it looks today.”

Lowery, former lead singer for Cracker, began an Internet tirade earlier this week in response to what he calls the “Entitled Generation”: twenty-somethings who call themselves music lovers, yet have never purchased a CD. Lowery claims that Spotify rips musicians off, but Caldas says the digital music revolution, while different, is ultimately good for the music business.

“Let’s say there are a thousand spins over that person’s lifetime,” Caldas said to “For whatever the wholesale price of that purchase was, it’s getting to the point where it would be better if that person subscribed to a music service for the rest of their life and played the songs the same amount of times. It would actually generate more money for the artist over that period of time.”  

Plus, Caldas said, free on Spotify doesn’t mean the same as pirated from Napster.

“There are no streams on Spotify where the rights holder doesn’t get paid,” he told “It’s free to the consumer, but it’s not free to Spotify. It’s not rocket science.”