Spotify Looking to Make Direct Licensing Deal With Independent Artists

Streaming is changing the music business completely. The internet is a wide network and for emerging continents likes Africa, streaming companies like Apple Music and Spotify help them connect their music to a global audience without too much hassle. It’s taken the difficulties of exporting the music. The popularity of the African sound makes the foreign demographic stumbling on music from African acts through random playlists, accepting the sound enough to stream their music.

The 12-year-old Stockholm company Spotify, a top brand in the streaming business has recently struck direct licensing deals with a small number of independent artists. The deals give those artists a way onto the streaming platform and a closer relationship to the company — an advantage when pitching music for its influential playlists — while bypassing the major labels altogether.

Spotify typically pays a record label around 52 percent of the revenue generated by each stream, or play, of a given song. The label, in turn, pays the artist a royalty of anywhere from 15 percent to, in some cases, 50 percent of its cut. By agreeing to a direct licensing deal with Spotify, artists and their representatives are able to keep the whole payout.

“Licensing content does not make us a label, nor do we have any interest in becoming a label,” Mr. Ek said on the call. “We don’t own any rights to any music, and we’re not acting like a record label”, New York Times reports.

This will have a large ripple effect moving forward making the idea of a ‘record label’ more redundant. Africa will also benefit from this freedom, a structured system they’ll be able to place their music on and receive money directly without the typical miscoming of the Nigerian music system. Spotify’s licensing deals allow the independent artist to still place their music on rival streaming platforms.

We all know streaming platforms are becoming the internet age’s record labels.

According to public filings, Spotify had about $4.9 billion in revenue last year but almost $1.5 billion in net losses. Its stock price has risen steadily since it went public in April, and the company is valued at roughly $34 billion.