Disruption has long been the name of the game when it comes to success in the digital space. Uber and Lyft destroyed the need for taxis, much like how Amazon Prime’s 2-day deliveries have undercut the success of box stores such as Wal-Mart and Target.
In music, disruption tends to happen all at once. iTunes, for example, changed the music industry overnight. As soon as people were aware of an alternative method for accessing music they could not be convinced to return to their old habits. Streaming services followed years later, with Spotify leading the pack as the latest and most efficient way to enjoy every song you’ve ever known at a price point those dealing with physical products (CDs, cassettes, etc) could never match.
Throughout all these evolutions, however, one area of music has remained largely untouched. Distribution, specifically as it relates to digital stores, has long been controlled by a few select companies (Tunecore, CDBaby) that offer access to placement on anywhere from one to several hundred digital stores in exchange for a percentage of the artists’ revenue. These companies have especially thrived in the streaming era as the demand to be available everywhere has never been higher (or more difficult to achieve without a third party help).
This week, Spotify announced a new development that threatens to challenge this distribution market. Beginning September 20th the streaming service began allowing a select number of indie artists to upload their music directly to Spotify themselves, marking a stark shift in the way distribution works throughout the industry. Artists who do this are also paid directly from Spotify, meaning they no longer have to share a portion of their revenue with distribution providers.
With this service, artists who control their copyrights and do not have label or distribution agreements in place can log into their Spotify For Artists account, upload their music, fill in relevant metadata information, preview how the upload will look on their page and set the song to go live at a pre-scheduled time.
As for payments, Billboard recently broke down how a partnership with Stripe will help not only get artists paid, but provide insight into their longterm revenue development:
Through payment-processing provider Stripe, Spotify will facilitate royalty payments, which will be accounted each month. In an email, a rep for Spotify clarified that artists who directly upload their music will receive 50 percent of Spotify’s net revenue (the service will also account to publishers and collection societies) and will keep 100 percent of royalties on that music. Artists will be able to track historical payments, as well as see projections for future payments, and track when those will be deposited in their bank accounts.
“One of the things we’ve heard from the tests is this level of transparency really helps artists be able to plan and budget for the future as well as connect their overall performance on Spotify – how their music is performing, how their fans are discovering their music – using all those existing tools along with these additional tools to release music and get paid,” Anoliefo says. “There’s not that much information needed other than the music and the metadata associated with it, and then we’ll take care of the rest.”
The idea of cutting out the middleman from distribution seems like a win-win for everyone except the hundreds employed by distro services. Whether or not Spotify’s plan will be imitated by Amazon, Apple Music, and other leading streaming services remains to be seen, but as each company competes to be the most popular platform it’s likely they will continue to empower artists and further develop their relationships with them. Follow Haulix on Twitter for updates.
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