Digital music distribution, either by providing a way to upload one’s music to digital music stores like Apple and Amazon or putting one’s music onto major streaming platforms like Apple Music, Spotify, YouTube, etc is limited in paths towards sustainable revenue. CDBaby charges per single and album with a tiered system
where with extra money is put towards global registration and publishing; UnitedMasters, backed by Alphabet, Andreessen Horowitz, and 20th Century Studios, claims 10% of what an artist makes on what they distribute; others (see: DistroKid / Tunecore / Ditto Music) charge a flat fee for distribution and then tack on more for other “services” like publishing or worldwide royalty collection.
There is an endless trove
of YouTube videos
that litigate what is the best distributor for artists because of new players in the space and the chameleon-like nature of these businesses. More are looking into incorporating publishing, locally or globally; DistroKid may charge more for YouTube Content IDs
, and others like STEM just recentered on higher-tier artists for distribution. The range of options being floated by these companies in a way illustrates that music distribution exists at the mercy of streaming. Either keep costs low and aim for scale or increase them and hope for more success for artists. Suddenly this starts to sound like the math of a record label.
This can be best seen in a recent op-ed by Lee Parsons
, CEO of Ditto Music, who wrote in Music Business Worldwide a defense of music streaming from the #brokenrecord campaign and the tone of critiquing the streaming model. Parsons supports user-centric streaming (he and Mr. Gray, the man who started the #brokenrecord campaign agree here) and appears fine with poking the major labels, which he’s in direct competition with, so what exactly is the problem? Shawn Reynaldo in his newsletter First Floor offered an explanation
Parsons isn’t alone either; in recent years, a whole cottage industry of Ditto-like companies has arisen, many of them glorified middlemen offering to “help” artists get their music on streaming platforms—for a small fee and/or a cut of the profits of course. These companies rely on volume, as bringing in $100 of revenue for a single artist isn’t much, but when that increases to 1000 or 10000 artists, it quickly starts to become real money.
The issue for Parsons or potentially other music distributors is that any change that could undermine the current streaming set-up is a concern for them. That could be why you see DistroKid named Republic Records
, owned by Universal Music Group, as its first label partner where it’ll help Republic identify emerging artists for a small cut of that future artist’s success. STEM and Ditto are both interested in unique flavors of financial backing, the former going for more traditional advances and the latter blockchain-centered. The viability of these various strategies is a bit immaterial because the way they’ll be making money is ultimately through streaming revenue, which is a space dominated and negotiated by major labels.
Sony’s recent purchase of AWAL, a formally “independent” music distribution company, may help explain this web. The company’s aim wasn’t sheer scale but rather more closely mimicked a record label, not unlike EMPIRE or UMG’s recently renamed Virgin Music Label & Artist Services that was once Caroline Distribution. AWAL, again financed by Google Ventures and MSD Capital, points out that these firms often function as the tech and music elite’s farm team for the major label system. Though many of these companies are still privately held, unless there is a massive breakup of the major labels, they’ll remain subservient to them, which is why many are looking into new revenue streams (publishing, international royalties, blockchain, etc.). Suddenly, music distributors start to mirror major labels, and again, who are artists to trust: major labels or music distributors backed by private equity and venture capital? Hard to see how the best interests of artists can be served.