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Spotify to Musicians: Let Us Be Your Label

By December 5, 2018No Comments

Big question: Can a direct-to-consumer music service (like Spotify) cut out the record labels?

Revenue going to the artist:
1)
Major label — 15–20%
2)
Spotify direct — 50%

An argument for: Streaming is now the largest revenue generator for recorded music at $6.6B. Could Spotify use its massive data set to identify consumer tastes better than the labels?

An argument against: The top 10 best selling albums are all distributed by a major label and even an artist like Taylor Swift chose to re-up with a label. If anyone could have gone it alone it was her.

Flashback #1: The music industry’s 9-figure war for Taylor Swift

Quote from Doug Davis — Founder @ The Davis Firm:
“There’s no precedent to look to regarding the top-selling artist of the digital era becoming a total free agent…Taylor Swift is at an extraordinary point in her career where she can write her own ticket in regards to the commercial terms and deal structure. If she is seeking to break financial records and extend with a major, she could have the biggest artist deal of the century so far. If she wants to be creative and choose an alternative structure for capitalization, she could create her own business model. It’s very exciting.”

Flashback #2: Visualizing 40 Years of Music Industry Sales

YoY growth rate in streaming revenue:
1) 2012 — ↑ 61%
2)
2013 — ↑ 61%
3)
2014 — ↑ 20%
4)
2015 — ↑ 56%
5)
2016 — ↑ 83%
6)
2017 — ↑ 59%

More #1: iHeartMedia To Acquire Programmatic Radio Platform Jelli

More #2: How Liberty Media Learned To Love Pandora

More #3: Pandora’s head of ad innovation on what advertisers need to know about audio

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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