Probably the biggest news of last week was Spotify and Universal agreeing to terms on a licensing deal, apparently one that is “long-term.” What does this mean?
For Spotify: It will help them go public in 2017. By going public, they raise more money to invest into more markets, more ideas, and fight off their competition (Apple Music, Amazon, Tidal, etc.). Read THIS to understand all the ins and outs of going public, including what Spotify may specifically be thinking. It’s all economics, but isn’t that how money is made in the first place?
For Universal: They hate the free tier Spotify offers because the subscription tier pays more royalties. This deal takes certain artists off of the free tier for two weeks upon release (called Windowing), which, in turn, will hopefully lead to more streams at the higher royalty rate and more subscribers to the service which will raise more royalties. Which will bring in more dollars.
For Universal Artists: Listen, streaming isn’t the future anymore. It’s the present. Universal artists have contracts that determine what their royalty rates are. If more people subscribe, higher royalties are paid to the labels. Which means artists can conceivably recoup sooner and conceivably make money sooner. It is what it is. You can’t fight city hall. Tour. Sell merch. Figure out all of your potential revenue streams and build a plan to exploit each one.
Don’t complain about an old system in which artists sold CDs and made more money from them. That system is over. Kaput. Done. Adios to it. Now take a deep breath and carpe yourself some diem!
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Professor David Philp is Assistant Professor Music Management & Popular Music Studies at William Paterson University. He is the co-host of the only FREE advice college radio-based music & entertainment industry talk show in America, Music Biz 101 & More, which airs live most Wednesday nights and is available as a podcast HERE every night (days too). Your favorite professor is also co-author (with Dr. Steve Marcone) of Managing Your Band – 6th Edition. Reach him at PhilpD@wpunj.edu or find him on LinkedIn HERE.