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“effortlessly distribute their music to other platforms through DistroKid”.So, instead of putting all their streaming eggs in one basket, Spotify’s direct artists now get to stream their music on Apple, Amazon, Deezer and the rest too. What wasn’t explained in the announcement is whether Spotify will have exposure of the streaming information from those other platforms and/ or whether the revenue will be acknowledged as Spotify profits and after that distributed to its artists. If these statements were to be the case, then Spotify’s competitors would be feeding it information and earnings …
UPDATE: A Spotify representative clarified that “Spotify has no rights to see information from other digital company and DistroKid will not share private information.”
Why this reasonably small announcement matters, is that it is another piece of Spotify’s technique of shifting its method up the value chain by a) eliminating a few of the distribution part and b) participating in direct relationships with artists. It’s what west coast tech companies call ‘bring efficiencies into the supply chain’. If all of it works, Spotify will get more margin, artists will get more margin, but middle gamers (labels, suppliers and so on) will get squeezed.
“As much as the entire world appears to be stating Spotify needs to do a Netflix (and it probably does) it just can’t, not yet at least. In TELEVISION, rights are so fragmented that Netflix can have Disney and Fox pull their content and it ‘d still be a fast growing service. If UMG pulled its content from Spotify, the latter would be dead in the water. So, Spotify will take a subtler path to ‘doing a Netflix’, first by ‘doing a Soundcloud’ i.e. ending up being a direct platform for artists and then switching on monetisation and so on”.
The challenge for Spotify is whether it can execute on the strategy rapidly enough to thrill financiers (and hence increase the share cost), however gradually sufficient to keep record labels on board … so that when they realise where things are heading then it is far too late for them to do anything about it.
With news that Spotify had actually invested in DistroKid and offer it as a distribution avenue to other music services, came speculation as to the music banner’s higher intentions. MIDiA analyst Mark Mulligan sees the move as part of Spotify’s technique to work way up music’s worth chain by “a) removing some of the circulation component and b) participating in direct relationships with artists.” However how will the record identifies respond?
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