Spotify’s new business strategies are rubbing major music labels the wrong way
Historically, three conglomerates have controlled around 80 percent of the music industry: Universal, Sony, and Warner. Now the Stockholm-based streaming giant, Spotify, is experimenting with a few new business approaches that are making the major labels nervous.
Only a year after Spotify re-negotiated it’s contracts with the three major labels, it is has been licensing music directly with a small amount of independent artists. Not only that, there’s been numerous reports of Spotify quietly giving pay advances to “management firms and other artist-representation groups to get direct deals.” All the while, Spotify remains heavily dependent on the major labels to populate the vast majority of its 35-million-song catalog.
While Spotify CEO Daniel Ek insisted it has not been acting like a record company in the company’s July quarterly earnings report, the move is rubbing music executives the wrong way, revealing to the New York Times that they are growing increasingly distrustful of the Swedish music streaming platform.
“Licensing content does not make us a label, nor do we have any interest in becoming a label. We don’t own any rights to any music, and we’re not acting like a record label.” – Daniel Ek.
When Spotify went public back in spring, the music streaming giant alluded to wanting to revolutionize the “old model” of the music business, wherein artists rely too heavily on “gatekeepers” like record companies and radio for mass distribution of their music. Spotify said it wanted to usher in a “new era” that allows new coming artists break through more easily. And based on their recent business moves, it seems the time is now.
Spotify is now worth $32 billion, as reported to their shareholders at the end of July. The end-of-quarter report also boasted 180 million users, with 83 million of those subscribing to the premium tier.
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