Digital Distributors Are ‘Freaking Out’ After Spotify’s Distrokid Announcement — And I Don’t Blame Them

Distrokid advertises its hand-in-glove Spotify connection.
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Distrokid advertises its hand-in-glove Spotify connection.
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Distrokid’s groundbreaking deal with Spotify is threatening to shake up the entire digital distribution space.  And potentially weed out a lot of competitors.

“They’re freaking out.  Freaking… Out.”

That’s how one recording industry executive phrased it recently to Digital Music News.  And that was before Distrokid’s deal with Spotify had been officially announced.  All the world knew last week was that Spotify was opening direct uploads for artists.  And that was seriously worrying a number of leading digital distributors, according to our conversations.

Now, we know that direct uploading is just one part of a bigger distribution strategy for Spotify, one that could potentially wipe out a number of intermediaries in the space.

Earlier this week, Digital Music News leaked news of a sweetheart deal between Distrokid and Spotify, one that offered preferential platform access to Distrokid artists.  Others were also part of the inner circle — including CD Baby, Glasgow-based EmuBands, FUGA, and The Orchard — but Distrokid was ostensibly the preferred horse.

Within hours, Spotify confirmed the scuttlebutt: Distrokid was not only a preferred distribution partner, they were an integral part of Spotify’s own distribution strategy ahead.  Spotify revealed a minority investment in Distrokid, and disclosed that the company will also be leveraged to distribute music to Spotify competitors.

Philip Kaplan, who created Distrokid, has long claimed a top spot among other digital distributors.  In one email to Digital Music News, Kaplan chastised us for not including Distrokid alongside other market leaders like CD Baby and Tunecore.  “It’s sorta like mentioning Hotmail and AOL but not Gmail,” Kaplan declared.

He doesn’t have to send those emails anymore.

Now, the question is this: will heavyweight competitors like Tunecore become the Hotmails of the music distribution future?

One critical detail we don’t know is whether Spotify plans to charge artists to distribute their music to competing platforms like Apple Music.  But even a nominal charge gives Spotify+Distrokid a major leg up.  For starters, artists are guaranteed frontline access to Spotify for Artists, and free Spotify distribution.  But even a discounted distribution package to completing platforms makes it difficult for other distributors to effectively compete.

In the wake of Spotify’s initial direct-upload announcement, digital distributors downplayed the importance of the deal.  The main reason was that artists need distribution everywhere.  Now, Spotify has addressed that issue head-on.

Is Apple Music the next big foot to drop?

According to another source that works with multiple streaming services, Apple Music is ‘highly likely’ to counter Spotify’s move with its own direct distribution strategy.  Currently, the company has a robust system for uploading all sorts of content, though artists have been using intermediaries since iTunes Music ruled the landscape.

Now, Apple is facing pressure to change that approach, with a direct-upload tool potentially ahead.  And that pressure will only intensify once Apple Music starts getting uploads delivered by Spotify.

The result could be that two of the largest streaming platforms in the world will be offering direct-uploading capabilities to artists, not to mention distribution to competing services as well.

But that doesn’t necessarily mean that digital distributors are going to get squeezed entirely.  Perhaps this is simply an ‘evolutionary event’ for the distribution space.

Moving beyond commodity distribution, companies like ONErpm and Empire Distribution are creating hybridized distributor/label companies, with high-touch service and A&R.  “Everyone does distro,” ONErpm Emmanuel Zunz told us.  “That’s why we position ourselves as a solutions company or a modern music company that is constantly evolving.”

There’s also another detail that shouldn’t be overlooked.  Switching distributors is easy for early-stage artists, but it gets far trickier for those with years of data, play counts, and royalties to think about.  In many cases, we’ve heard that artists can lose valuable play counts and even playlist slots when they switch distributors, both on the DIY artist and label distributor side.

Meanwhile, we’re waiting for more news on the Spotify+Distrokid front.  Including the distinct possibility that Spotify’s minority investment turns into something more.




11 Responses

  1. Anonymous

    Has anyone seriously looked at why direct uploads are a good thing? We’re all assuming it’s a positive for artists but if you look closely, it’s lowering the already too low payouts for artists and platforms like Distrokid are gleefully leading artists down this road hoping for a big exit.

    • Another Anonymous

      You liar. How would you earn less if you cut out a digital middleman? I see you are anonymous. I can see why. Artists should at least have the option to “distribute their music themselves and not have to pay someone else to merely upload their music.

  2. Nick Dunn - Horus Music

    I’ve run a model on the difference between what us distributors get and what the artist will get via the direct model. Although the headline says the artist is better, the reality is they are not once you add the 6% fee Spotify include and the fee and % slate put into the equation and this was based calculations for all territories and packages Spotify offer. Nice headlines for Spotify and Distrokid but it’s actually misleading.

  3. Dave

    For as many bells and whistles as Distrokid has, there is still a market for the budget minded consumer. And as long as Spotify and others are still willing to work with other distributors/aggregators, all is well for users. More choices are always better than fewer.

    And who is to say the Spotify won’t go ‘poof’ in a few years. Especially at their current cash burn-rate.

  4. the opinions expressed

    Distrokid actually is much less advanced than its rivals like CD Baby. They even didn’t have any payment method other than Paypal ’till last year. But they’re small, plus great customer service

  5. Voice of Reason

    The digital music world has changed for the worst. Artist continue to be bent over while the streaming company execs get filthy rich. Fuck Spotify.

  6. From One Artist To Another

    Spotify has the least payout for the artist. Allowing direct uploads dilutes the platform, as well as, allows even lower payouts. Artists should be aware that their own online page could suffice, based on a loyal fan base.

  7. Joel

    Still relevant things / a lot to think about. While a lot of unthinkably great things are happening I hear also a lot of bs…such as (here in the comment section) “has the least payout for the artist”. Such a bs!!! They still pay the most. Apple Music pays less. I mean. Some ppl are just saying things to say something. Luckily we have ppl like DistroKid, Spotify, Digitalmusicnews etc who actually doing things. Thank you!

  8. peter

    The reality is many of these digital distributors who all they do is just upload your music but can remove your music anytime are pointless some are free but take a percentage of your streams others you pay monthly or yearly. Since artists or labels put it in all the work many of these distributors will treat their customers horrible some even hold your pay or keep your money. I think its GREAT streaming services can allow artists to upload their music and to make it fair spotify can charge a one time fee or monthly fee while artist keeps all money.