(Hypebot) — The major labels are lobbying Spotify and other streaming music platforms less, according to a top music executive. The reason is falling market share for the majors.
While working to distribute more independent record labels via their owned distributors, including Sony’s AWAL and The Orchard, UMG’s Virgin, and WMG’s ADA, the majors view D.I.Y. artists and their distributors like DistroKid, Tunecore, and CD Baby very differently.
Sony Music chief Rob Stringer recently called D.I.Y. music uploads “flotsam and jetsam, and it’s just stuff that’s taking up some of the market shares because of scale.” The Oxford Dictionary defines flotsam as useless or discarded objects and jetsam as something deliberately thrown overboard to lighten a ship’s load.
“I know major record labels are pushing for lower rates for [DIY] artists, and I just don’t think it’s right,” Denis Ladegaillerie, the Founder and CEO of Paris-based Believe, told MBW. “The reason major record labels are pushing for this is that they’ve been consistently losing market share for the past five years” because of the volume of releases coming out via DIY platforms.
While Believe is a full-service independent distributor, it also owns TuneCore for D.I.Y. artists.
“For the major record companies, their dominance of streaming market share isn’t just important in terms of their revenues,” continued Ladegaillerie, “Crucially, it also affects their leverage when they’re renegotiating licensing agreements with Spotify or Apple or Amazon and other music streaming platforms or owners.”
Payments from Spotify, Apple Music, Amazon Music, and other music streamers to labels and artists are based on a percentage of revenue. When the division of that revenue is diluted by payments on tens of millions of D.I.Y. tracks – even those that receive a few thousand or a few hundred streams each – the share that each major label artist receives declines.
Will the major labels get the streamers to pay D.I.Y artists less?
The backlash from artists, fans, and even government agencies would be strong.
But it’s far less of a stretch to imagine labels getting streamers to pay a premium royalty for top-tier artists, which sadly is effectively the same thing.