Spotify is reportedly offering advances and appealing business terms to independent artists in hopes of convincing them to license their music directly with the streaming music app instead of going through a third-party distribution service.
Billboard reports that some of the company’s deals have promised artists and their management “several hundred thousand dollars as an advance fee for agreeing to license a certain number of tracks by their independent acts directly to Spotify.”
“In some cases,” Billboard says Spotify is offering a 50 percent cut of per-stream royalty rates. That’s less than the percentage major labels earn, but artists end up with a significantly smaller portion of those label royalties, so Spotify’s proposal could be enticing. Indie musicians often license their music to Spotify, Apple Music, and other services by using third-party distribution companies like TuneCore as the middle man. Spotify’s strategy also seeks to cut those distribution services out of the picture by allowing artists to license the same music that Spotify is getting to other platforms while “retaining full revenue” from those deals. There’s no exclusivity involved. Additionally, artists maintain ownership of their master recordings, which is rarely the case under label contracts.
It’s likely that Spotify is limiting these attractive licensing terms to popular indie acts for now, as negotiating with a large roster of artists would quickly get very complicated. And in an obvious sign that it’s seeking to avoid angering record label partners, Billboard notes that Spotify is discouraging artists from saying things like they’ve “signed” with the streaming music company. Many of Spotify’s agreements with record labels forbid the company from directly challenging them, according to the report. Thus, Spotify is pursuing independent musicians instead of trying to poach label talent.
Read More: https://www.theverge.com/2018/6/6/17435070/spotify-artist-direct-licensing-advances-rumor