Spotify users enjoyed more than 1m plays of Lady Gaga's song Poker Face – which earned her the sum of $167.

Somebody must be making money out of the music-streaming service Spotify, mustn't they? This isn't the early 1990s, after all. You can no longer have a business model that says: we're going to be a tech-sounding company, right, and venture capitalists are going to give us millions, right, all of which we are going to spend on cargo pants, haircuts and those weird trainers with ninja toes. And then, as long as we get to the stock market flotation before anybody notices that we haven't worked out a way of getting paid for whatever our gadget does, we're laughing.

Those were the good old days. But Spotify isn't like that. Spotify shows every sign of actually being a proper business. Advertisers pay Spotify to play their adverts on the free service; subscribers pay Spotify a tenner or so a month to use it advert-free; Spotify pays record companies to stream their music; and the record companies pay their artists royalties.

All happy? Well, no. The British Academy of Songwriters, Composers and Authors has complained that Spotify's payments to songwriters are "tiny", and that the way they are calculated is distressingly opaque. The most eyecatching detail to emerge recently is the claim that, in a five-month period shortly after the service launched, Spotify users enjoyed more than 1m plays of Lady Gaga's song Poker Face – which earned Her Gaganess the sum of $167.

Words of consternation have likely been exchanged between members of what the tiny pop deity likes to call the "Haus of Gaga". To be fair to Spotify, this is probably where the questions should be asked. Her songwriting royalty, after all, is down to her contract with her record company, and if they signed a deal to give Spotify all her songs in exchange for a half-sucked gobstopper covered in pocket-fluff, that's their look-out.

Spotify, anyway, protests that the Gaga figure is misleading, partial and out-of-date. No doubt it is. But it would have to be misleading, partial and out-of-date by an astonishing order of magnitude not to still be a shocker. And there have been complaints hither and yon from songwriters and independent record labels that if anyone is making money from Spotify, it is not them.

This is worrying. Because in the Good Cop/Bad Cop working-over that the internet has been giving to the music industry's kidneys, Spotify and its like are Good Cop. Bad Cop is the prospect of anarchy, with nobody getting paid for anything ever again. Spotify is the cool company that keeps the Kids happy, but also signs contracts with the Man.

And if this is the best Good Cop can do, God help us all. A spokesman for the body that collects songwriters' royalties has boasted that it sets a minimum rate of 0.085p per stream (or, to put it another way, £0.00085). So, unless I mistake the arithmetic, a song played 1m times would net its author £850.

It may be true that if you're Radiohead, you can make money by using free downloads as publicity for live tours; or if you're Chris Anderson, author of Free: The Future of a Radical Price, you can give your book away and make your money giving lectures about it to businessmen. But not all of those who make their living from intellectual property are in such a position. And there's an ambient thuggishness in the way the market for creative work is being distorted by theft. Good Cop benefits enormously from Bad Cop's existence.

The traditional narrative of Bad Cop, as far as teenagers are concerned, is this: record companies are big, complacent, greedy, corporate and hidebound; filesharers are spunky, innovative, buccaneering, libertarian. Therefore the record companies deserve to be ripped off. The fault lies with them for failing to realise that their "business model is broken". This is generally said with a palpable tone of satisfaction.

But what of the artists and song-writers? Do they deserve to be ripped off, too? Even those on major labels will be on a meagre enough royalty. Apparently, it serves them right for signing with a record company, rather than self-publishing. Don't they know that that business model is broken?

Well, it's broken because people are breaking it. The fact that you consider something too expensive is not a justification for stealing it. It's a justification for not buying it. But in none of the arguments have I come across anyone who has properly explained why illegal filesharing is OK. And if it's not OK, why should its effect on the market be welcomed with a wink?

Years ago, when millionaire rockers Metallica sued Napster for allowing penniless students to share their music for free, they looked greedy, bullying and uncool, as well as sweaty and hairy. Yet they are being proved right.

To demonstrate that the digital economy bill, intended to tackle such online infringements, will be an ineffective and illiberal way of protecting copyright is not the same thing as demonstrating that copyright needs or deserves no protection. The example of Spotify – while thrilling, innovative and all the rest – seems at this stage to bear that out. As I say, if this is the best Good Cop can do, songwriters haven't got much to be cheerful about.

Sourced from: www.guardian.co.uk/music