In a recent surprise movie, Spotify announced that it will now give indie artists the option of uploading their music directly to the streaming service for free, rather than requiring artists to use a distributor. While this may simply seem like a blessing to artists, this new option is all part of Spotify's broader strategy.
Guest post by Bobby Owsinski of Music 3.0
In a surprise announcement, Spotify will now allow indie artists to bypass distributors like CD Baby and TuneCore and directly upload their songs to the platform. Best of all, there will be no charge to do so, relieving artists from paying the nominal fees that distributors charge for the service. The upload feature will be available via the Spotify For Artists section of the platform, which has about 200,000 users so far. An artist must have a verified account first before being able to join Spotify For Artists.
That said, the feature is in invite-only beta mode and only a few hundred US artists are receiving the offer. The company says that it will open it up to everyone on the service in the future, but no date for the full launch has been given.
There’s A Strategy At Work Here
There’s actually more strategy behind the direct upload feature than meets the eye. For one thing, direct uploads become a big differentiator between platforms, since major rival Apple Music is such a closed environment that it’s doubtful that it would ever be open to something similar. Many indie artists are likely to upload to Spotify alone (not a great idea in the grand scheme of things, but it’s easy to go with just the market leader), thereby giving the platform what amounts to a great deal of exclusive content. It may not be the top hits, but it could add up substantially over time even on an indie level.
Second, it may boost the number of users as artists who were not subscribers must now do so in order to upload their songs. This might be a way to lure more influential users away from competitor platforms, something that’s been a difficult task until now since once a user has made a decision on a platform it’s hard to get them to change. With content that’s more or less exclusive to Spotify, fans of the artist will have to subscribe to listen as well. This may not be millions, but it may be enough to move the needle.
Finally, it’s a way to increase the catalog volume, which can be another differentiator in the market. While in reality the number of songs in a platform’s catalog ultimately doesn’t matter to a subscriber (they listen to a limited number), it does to a new potential subscriber. Spotify currently touts 30 million songs in its library while Apple Music has 40 million. Imagine that you’re a new potential subscriber comparing platforms. With all else being equal, why not choose the one with more songs? This could be a way for Spotify to close the library gap quickly.
Now a major downside of direct upload is that it creates the opportunity for massive fraud, where anyone can register as an artist, rip a recording of another artist’s song, and upload it as their own. Since Spotify doesn’t yet have a content management system like YouTube’s Content ID in place, it opens up the platform to pressure from copyright holders to police the situation, and the costs of that could negate any benefit that the direct upload feature has brought.
Another potential downside could be that even though Spotify announced that the upload service will be free, there’s much speculation that this will be for a limited time period only, as the market and stockholders might eventually force the platform to institute a fee. Yes, it’s a new source of income, but for an artist, why not just go to a distributor again if there’s a fee involved? Charging for the service would defeat the purpose of direct uploads.
CD Baby, TuneCore, Ditto, and DistroKid are distributors that will take an artist’s songs and distribute them to all the streaming platforms for a fee. Until now, it was the only way for an act not signed to a label to get their music on Spotify and Apple Music, as well a host of competitors, at the same time. Ideally, an artist should be on every platform to be sure that they accommodate the preferences of their fans and accumulate revenue, but since Spotify is king of the streaming hill at the moment, many less savvy artists will believe that being on just that one major platform may be enough.
As a result, look for the distributors to take at least a short-term hit, but this will not lead to their demise. Presence on one platform isn’t enough and artists will eventually learn that’s the case and understand the service that a distributor supplies can be quite beneficial. On the other hand, the distributor will have to emphasize benefits to artists other than being just a middleman in order to continue to thrive.
Many are predicting the demise of SoundCloud as a result of Spotify’s direct upload feature, with the thinking being that artists will no longer need the platform if they can upload directly to the market leader. What they don’t realize is that SoundCloud actually provides a valuable behind-the-scenes purpose for an artist.
Artists often utilize the private settings on SoundCloud to share unreleased songs with labels, managers, agents, and collaborators. Sometimes the material is just in demo stages and not releasable. Sometimes it’s an exclusive but limited release to superfans only. In other words, it’s a safe haven to allow a restricted number of listeners access to the music. Spotify doesn’t have this feature, and as a result, SoundCloud is still abundantly useful to artists and will remain so unless Spotify launches something similar.
In the end, Spotify’s direct upload strategy has many under-the-radar facets to it that will likely make some waves in the near future, but will probably not end up being a game-changer either way in the long run.