The Distributor Wars

The streaming wars are what the mainstream press like to focus on (Spotify v Apple etc.) but I think the distribution landscape is much more exciting and interesting.

It’s reported that DIY artists will earn more than $1 Billion this year and Goldman Sachs has just issued a report estimating that by 2030 1.15 Billion people will pay for music streaming. That means there’s a landgrab going on and some pretty crazy stuff happening.

Just a few years ago, artists had to give away up to 85% of their revenue in exchange for a record deal. Often even successful artists barely made any money, due to how record label contracts were structured, where EVERYTHING was billed back to the artist.

Streaming and technology now allows artists to upload their music to platform like Spotify and Apple Music quite literally for nothing. Or at worst, up to just 20% of their revenues in exchange for marketing support and label services as well as distribution (true story, I don’t even know what label services mean in 2019 but that’s a topic for another day).

This week at the Midem conference in Cannes, Amuse CEO Diego Farias told a story about how he offered Lil Nas X over $1 million dollars to sign with them. It’s worth noting that Amuse distribute artists for free, no cost at all. If an artist starts to pop on their platform then they offer more traditional record label deals but it’s free for artists to use Amuse, at least initially.

This caused a bit of a reaction online, not least of all from Ditto Music CEO Lee Parsons.

Then this week another distributor, Stem culled a lot of their artists and increased their rates from 5% to 10% (8% for the existing artists they retained). This caused anger from the artists they let go and discussion on the sustainability of VC funded distributors operating on low margins to gain market share.

Then I saw this tweet from Distrokid which is actually genius…

Think about it, nobody actually plays cassettes any more but they are a great novelty merch item that will go down well with the Instagram generation and who doesn’t love nostalgia? Looking at the comments on their tweet I’m not the only one who thinks this.

Which got me to thinking, with a lot of distributors offering pretty much the same service, ie a pipe to the streaming platforms, what should they be doing to differentiate themselves from each other?

Keep an eye out for my next blog post where I’ll have some suggestions.

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