As streaming platforms conquer the music industry, Spotify wants to be your record label
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

As streaming platforms conquer the music industry, Spotify wants to be your record label

Traditionally, the music industry works like this: an artist signs with a record label, which scores deals with various platforms (radio, streaming services, and other media), and then the music is put out through that platform. That means revenue from the music itself is split three ways: between platform, label, and artist. But now, market-leading streaming platform Spotify is looking to cut out the middle man, by offering to promote select artists’ music directly to audiences.

Despite growing at pace, and regularly beating the Street’s predictions, Spotify’s share price has suffered under the weight of a tech backlash over the last few months

graph 1511 spotify

Source: Yahoo Finance

It’s early days – musical artists rely on their labels to get airtime on radio and TV, and this year, the world’s top ten best-selling albums were all released or distributed by major labels. But there’s the possibility that this scenario is ripe for disruption. The U.S. music scene is the world’s largest, and streaming already accounts for three quarters of it. Spotify is the market leader, and eager to find a way to increase the revenue it can generate from its platform.

Spotify pays out more than 70% of monthly sales in royalties. Of that, the lion’s share goes to the label – artists typically take home around 15% to 20%. The company hopes that offering new artists a 50/50 split will wind up convincing many of them to upload their music directly. Spotify thinks it can put the music in front of a big enough audience to make that worthwhile, and trusts artists to do their own self-promotion. Early movers in the scheme, and the continued evolution of the music streaming market, suggests they could be right on both counts.

As CEO Daniel Ek wrote in a letter to investors earlier this year: “the old model favoured certain gatekeepers. Today, artists can produce and release their own music.”

Disclosure

Dominion holds Spotify in its Global Trends Luxury Fund


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
5.0/5 rating 1 vote

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.