Photo: Michael Fötsch (CC by 2.0)
Spotify has already signed direct deals with artists. Now, they’re likely to start signing a whole lot more. Want to be part of the action?
Why isn’t Spotify’s CEO an internet billionaire? That’s a question that Daniel Ek is probably asking himself every morning. But there’s actually a really simple reason.
Actually, there are three simple reasons: Universal Music Group, Sony Music Entertainment, and Warner Music Group. Those are the ‘big three’ major labels that are siphoning roughly 75% of Spotify’s revenues for royalty payments. And making it impossible for Spotify to go public like Snapchat.
The big labels own the music, so they get to do that. Those are the rules. But Spotify is starting to think about how to work around those rules.
So riddle me this: what if Spotify started signing their own artists?
After all, Netflix films its own television series. And once upon a time, Ed Sheeran was a another bloke walking the streets. So was every other famous artist selling millions today. So who says Spotify can’t (a) sign the next superstars, and (b) become wildly profitable in the process?
The wheels on this are already in motion. No, it’s won’t be called ‘Spotify Records’. But it will function like a modern-day record label. And that means signing artists, financing their growth, and controlling their copyrights (instead of constantly negotiating with the major labels).
+ The Contract from Hell That You Should NEVER Sign
TechCrunch journalist Josh Constine (a good person to follow) is already spilling the beans on this. Just this morning, Constantine reported that the streaming giant is seeking to construct ‘traditional record label-style deals with artists’. “Musicians who cut these deals could get a cash advance in exchange for Spotify owning a percentage of their recording revenues,” Constantine wrote.
But this wouldn’t work like Apple’s short-sighted, destructive cash deals with artists like Chance the Rapper. Instead, Spotify will be feeding the streaming ecosystem, while getting away from burdensome royalty rates.
Here’s how TechCrunch further breaks it down:
“These deals could potentially come with exclusivity clauses around when and where the artists could distribute their music elsewhere, but that’s not confirmed. Apple already offers up-front financial compensation in exchange for exclusivity, as Chance The Rapper just revealed he was paid $500,000 and given a commercial to make his album Coloring Book and Apple Music exclusive for the first two weeks. Spotify on the other hand is looking into more inclusive deals that align them with artists’ long-term success.”
So how to get signed by ‘Spotify Records’?
The answer is probably similar to the way you’d get signed by Universal, Sony, or Warner. Instead of praying for a deal, you develop your own groundswell like Ed Sheeran did. Labels care about data these days, because it offers proof that something bigger can happen.
But Spotify is even better at data. So they’ll be able to piece together your traction across YouTube, Shazam, BuzzAngle, Snapchat, search traffic, Pandora streams, and even piracy platforms. If they see a groundswell or positive data trend, they’re likely to take an interest.
+ The Musician’s Guide to Winning Every Single Legal Situation
Write your own contract.
There’s a potentially huge advantage in all of this. Spotify is probably willing to experiment with all sorts of deal structures, and learn along the way. Maybe they’re open to deals that only involve recordings and publishing, instead of more onerous 360-degree deals (read more about those, here). Or perhaps they’re cool with handing you back your copyrights, as long as they get a favorable licensing deal down the road (like, not 75%).
They might even be open to changing your contract down the road, to reflect newer advantages given to newer signed artists.
The only problem is that ‘Spotify Records’ hasn’t been announced. But it’s a pretty good bet that it will be in the not-too-distant future.
Stay tuned.
In other and more serious news — YouTube f*cks up big time: http://www.billboard.com/articles/business/7728775/youtube-restricted-lgbtq-videos-tegan-sara?utm_source=twitter&utm_source=t.co&utm_medium=referral
Billboard writer sick of not getting any pageviews. Writes a nasty comment on DMN.
Nope, not a Billboard writer. Also, your handle says it all.
Btw, it’s totally weird that DMN doesn’t write about YouTube’s LGBTQ ban.
So yet again the headline of this article has nothing to do with the content of the article. Article headline implies a “how-to,” with some actual relevant information. Actual article is a load of nonsensical waffle.
More fake news from DMN
Will be pretty interesting to see where this goes, it’s all about diversification.
Spotify Records – it’s a bit like a radio station deciding they will start their own record company or a distribution company doing likewise..
I suppose it is possible… but artists can already have direct deals or via their
aggregators with streaming and download providers like Apple Music, iTunes,
Spotify and Beatport (to name a few).
Exclusives are probably the only way to have an edge over your competition
but music is so fast moving and so fickle I don’t know whether that model really
makes much of a difference.
Digital music is still in those very early adolescent years. The publishers, labels, songwriters and artist are for the most part from the graveyard–cemetery, historical archives or one leg out and so these new jacks aren’t competing with one another on the data frontier, they’re up front and center against legends and mythical X clouds. Can a , Spotify , new artist contract really answer the problem of success in the music industry fan based or bank–financial ?
I might have to write a guide to Spotify on how to control content. Imagine if: Spotify created a ‘fourth major label,’ then acquired WMG. Suddenly, upwards of 30% of content licensed is directly under Spotify’s control. Radically lowering royalty costs, and more fairly distributing royalties.
Even deals themselves can revert copyright back to the artist, as long as Spotify gets a great deal.
Spotify: get smart. And grow the music industry in the process.
And how in a billion years is this going to be good for the artists, who even if they have a major international hit earn a few hundred measly dollars?????