Spotify is reportedly offering advances and other enticements to independent artists and their managers in an effort to have them directly license music with the streaming music service, effectively cutting out the label middleman.
According to Billboard, who first reported the story, some of Spotify’s officers have promised said artists and their teams “several hundred thousand dollars as an advance fee for agreeing to license a certain number of tracks by their independent acts directly to Spotify.”
Per the Billboard report, Spotify is, in some cases, offering some artists as much as a 50 percent cut of per-stream royalty rates. While that’s less than the share labels receive from the streaming service, it amounts to a bigger percentage for artists who directly license to Spotify.
So far, Spotify seems to be limiting these pitches to independent artists to avoid complicating the company’s vital relationships with labels and the unnamed sources quoted by Billboard said that Spotify is cautioning artists to avoid saying they have been ‘signed’ by Spotify.
Despite their caution, the offers to indie artists may be thin ice for Spotify in regards to their label partners. The streamer’s deals with major labels bar them from competing directly with the record labels’ main business, or from directly buying catalogue or musical recordings. But, Spotify CEO Daniel Ek appears to be willing to test that boundary.
“I still think that there’s huge inefficiencies when you think about how hard it is for artists to break through,” Ek said during a recent keynote Recode’s Code Conference last month. “The number one thing artists are asking for is ‘help me find an audience.’”
Ek added that Spotify plans to create more tools for artists and managers to foster artist discovery and extend their marketing budgets, further developing their direct relationship with content creators.
Under Spotify’s licensing terms, the company isn’t going to own the music it’ll purchase. It’s also not demanding exclusive distribution rights — any music it acquires can still be sold through Apple and Google or any competing service. Plus, it’s only going after lesser-known acts, not giant stars who already have major label deals. Any struggling musician will no doubt find all these terms extremely attractive and reasonable.
Indeed, the music industry has been on the precipice of a radical change, and Spotify might just be the company that finally pushes it over. The problem is, Spotify still needs music labels, which explains why it’s being really careful on how it talks about its new licensing schtick for artists.
SOURCE: Carl Velasco