On-demand streaming music service Spotify is now the second-largest source of revenue for the major music labels, according to Business Insider.
However, the gap between Spotify and iTunes -- the #1 source of revenue for labels -- apparently "remains extremely large," according to Business Insider's unnamed source. iTunes paid an estimated $3.2 billion to the labels in 2011.
An "optimistic view" of the situation, writes Business Insider, is that "the labels will support Spotify as an alternative to iTunes... Spotify will become a revenue source the labels [will] come to depend on." Business Insider reports (here) 23 million people used Spotify last month.
Spotify may soon generate even more revenue for the music industry if its recently-launched free web radio service takes off (RAIN coverage here and here). In related news, SoundExchange last week announced it has made $1 billion in royalty distrubitions since 2000 (RAIN coverage here).