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For this week’s dead-tree City Paper, I wrote about the anxieties many independent artists and labels feel about streaming applications like Spotify—-and why, despite the insignificant royalties, they’re tolerating those services.

Well, not all of them are tolerating Spotify. In an email today, David Andler of Baltimore distributor Morphius Records tells me that Philly label Exotic Fever asked him last night to remove its material from Spotify. Exotic Fever is run by Katy Otto, a member of Trophy Wife who for many years was active in D.C.’s rock scene.

But wait there’s more! After being criticized and dropped by labels Century Media and Mode Records, Spotify has responded with a statement defending its impact on the industry.

We are sorry that Century Media have opted not to offer its music to their fans through Spotify. Spotify has one of the biggest music libraries in the world – of over 15 million tracks – and is committed to offering our users the widest possible selection of music across artists and genres from around the world.

Spotify was launched out of a desire to develop a better, more convenient and legal alternative to music piracy. Spotify now monetises an audience the large majority of whom were downloading illegally (and therefore not making any money for the industry) before Spotify was available.

Spotify is now generating serious revenues for rights holders; since our launch just three years ago, we have paid over $100 million to labels and publishers, who, in turn, pass this on to the artists, composers and authors they represent. Indeed, a top Swedish music executive was recently quoted as saying that Spotify is currently the biggest single revenue source for the music industry in Scandinavia.

Spotify is now also the second single largest source of digital music revenue for labels in Europe (IFPI, Apr 2011). Billboard reported in April that Spotify territories saw an average digital growth rate of 43% last year. By contrast, neighbouring countries (without Spotify) saw only 9.3% digital growth.

We are very proud of the positive contribution that Spotify makes towards growth in the music industry.

Billboard contextualizes with some good points, including this one:

Quoting the amount made from streams of a given song in a given timeframe isn’t exactly the most accurate way to value the difference between the streaming vs. downloading model. One would have to value the cost-per-stream over the lifetime of that fan for a true comparison. If a fan plays a given song hundreds of times in their lifetime, is the cost per stream in total more or less than the one-time, 99-cent download?

In the meantime, Exotic Fever’s catalog still seems to be up on Spotify. I’m listening to Del Cielo‘s Wish and Wait right now.