Reports have gotten to us from our sources saying that Spotify is offering early payments and appealing business terms to independent artists with the hope that they can be convinced to license their music directly with the streaming music app rather than employing the services of a third-party. Our sources report that the company promised “several hundred thousand dollars as an advance fee for agreeing to license a certain number of tracks by their independent acts directly to Spotify,” to the artists and their managers.
Spotify will be offering a 50 percent cut of royalty rates for each stream “in some cases”. This is a smaller amount than the percentage huge labels make and artists tend to get a smaller portion of the label royalties, making the Spotify deal more interesting. Indie musicians sometimes license their music to Spotify, Apple Music, and other services using third-party distributions. Spotify aims to remove those third-parties in such a way that music will be licensed to Spotify through other mediums and Spotify still gets to keep the profit from each deal. There is no such thing as exclusiveness. Furthermore, artists can keep their ownership of master recordings which label contracts hardly permit.
There’s a big chance that for the moment, Spotify will restrict these attractive licensing conditions to popular indie artists since being in talking terms with a lot of artists might complicate matters. And since it is intending to evade pissing off label partners, the streaming company is keeping artists from making comments like they have “signed” with it. According to the report from our sources, a lot of agreements made between Spotify and record labels prohibit Spotify from challenging them in any way directly. As a result, Spotify is going after independent musicians rather than attempting to steal label talent.
Spotify CEO, Daniel Ek, says that this move by the company is meant to give artist a firm footing and make them efficient.