As a growing number of independent music companies are acquired by major labels, many questions arise, such as: Will indie artists and labels get a jump start on their success through global digital distribution, or will they go broke through deals that don’t allow them to receive a fair share of revenue? Furthermore, considering the rapidly expanding impact of technology on the music industry, will the evolution of tech level the field or widen the gap between independent and major labels?
The news that Spotify is expected to list on the New York Stock Exchange in the near future certainly shook up many in the music industry, illustrating the potential for indie artists to find themselves in less than desirable deals as a result of company acquisitions. Although initiatives such as 2014’s Fair Digital Deals Declaration (FD3) have helped artists secure the right to share the proceeds of acquisitions with their independent label, this is not always the case. For example, while Sony and Warner say they will share the proceeds of the Spotify IPO with all artists who are signed directly to those labels, it appears likely that many indie labels and artists won’t reap the benefits of deal terms between digital platforms and major labels, including those using services such as Caroline (Universal), The Orchard (Sony) and ADA (Warner).
At the same time, indie artists are well-positioned to experience significant gains as a result of these deals, gaining access to a much more advanced level of technological tools and expertise combined with a massive global distribution infrastructure through a major label. And although they may not earn money directly from some of these acquisitions, their career may benefit massively through a much wider reach than would have been possible via an independent label alone.
However, not everyone is happy about these deals. In fact, some are trying to take matters into their own hands in an attempt to retain sizable independent digital music services that aren’t associated with major labels. Damon Evans is one example, having launched a million-dollar crowdfunding campaign looking for investors in his music streaming service, Arena, founded on the concept of fair pay for musicians and free play for fans. Evans, the former owner of an independent distributor of vinyl and CDs, plans to focus his streaming service on purchasing merchandise from the artists, as a way to generate revenue without the need for paid subscribers or major label backing.
But are streaming services really the right place for indie artists to try to directly earn money, or are there other avenues with a higher likelihood of turning their finances around? One such possibility is the adoption of Blockchain for music rights registration and royalty distribution, which many industry experts believe holds the key to unlocking massive amounts of money that hasn’t been ending up in the bank accounts of the rights holders.
The acquisition of independent distributors and other music companies by major labels brings up highly complex questions about technology’s effect on distribution, revenue, and the success of artists. And while there are no easy answers, the benefits of tech advances in the music industry reach far and wide, providing virtually unknown artists with the potential to gain global awareness in the digital world.