• Spotify subscribers grew 33% in last year

By Todd Martens, Los Angeles TimesOctober 2, 2012, 9:00 p.m.

The music industry has been grappling with the following question for much of the last few years: Do streaming services such as Spotify, which allow users to listen to albums for free, cannibalize sales? Leave it to a banjo-wielding English folk-rock band to provide one very loud answer.”Babel,” the sophomore album from Mumford & Sons released on Glassnote Records last week, has had the biggest debut sales week of 2012, selling approximately 600,000 copies in the U.S., according to Nielsen SoundScan.

That number, revealed Tuesday, bests first-week totals from such A-list pop stars as Justin Bieber and Madonna and did so while being streamed more than 8 million times on Spotify.

Before the release of “Babel,” the bestselling debut of 2012 belonged to Bieber’s “Believe,” which opened with 374,000 copies sold and which has moved a total of 887,000 copies as of last week.

“You’re talking about a much different artist,” said Dave Bakula, a senior executive for Nielsen. “This is an album-driven artist. They’re not going to have one single solitary hit that defines the album. People want everything they can get from this artist, and that’s where you get large album sales.”

“Babel’s” 8 million-plus streams on Spotify are more than three times that of the previous record holder, said Kenneth Parks, Spotify’s chief content officer, although Parks refused to reveal the title.

“Our streaming numbers sit alongside a very healthy sales volume,” said Parks, whose service boasts more than 15 million worldwide users (Spotify doesn’t break out users by territory). “We’re living in a new age. There isn’t a single model of consumption for recorded music.”

Spotify has been criticized for offering lower royalty payments to labels and artists than they’d get from album sales. Other big name artists, such as Mumford & Sons country-mates Coldplay, have opted to withhold new albums from Spotify during the week of release, fearing that the ad-driven free service would hurt sales. Coldplay’s most recent album, “Mylo Xyloto,” sold 447,000 copies in its first week.

“Spotify is a huge form of exposure, and they’re not stealing,” said Glassnote Records founder Daniel Glass. “It’s retraining people to buy music through streaming services. Could we be getting better compensation? Yes, but I’m not going to hold it back from them. That’s old thinking.”

Glass credits the band’s success, in part, the band’s heavy touring schedule. Mumford & Sons, which will headline a sold-out Hollywood Bowl show on Nov. 10, has been playing most, if not all, the songs on “Babel” live for months before its release.

“They were playing some of these songs a year and a half ago,” Glass said. “The album became a formality. The fans can take the songs off YouTube, obviously, but they want the produced album.”

“So there’s still a record business,” Glass added. “For now.”