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%