Spotify is starting to sign some music acts directly

Spotify is starting to make music licensing deals with artists instead of going through music labels.

According to a report from Billboard, the music streaming company has been striking deals with some music management firms to license music from independent artists.

These deals can be for several hundred thousand dollars, which acts similarly to an advance fee. In some of these deals, it’s reported that the musician’s manager can stand to make 50 percent of the revenue per stream. This rate is very similar to the 54 percent per stream that major record labels make.

Spotify isn’t acting exactly like a label in these scenarios since it’s not buying the copyright to own the music. This is why the company pays quite a bit less to an artist, since it’s buying permission to use the song instead of the copyright. It works for artists since they’re still allowed to shop their music around to record labels.

The companies current licensing agreement prevents it from competing in a meaningful way with the major record labels, according to Billboard.  This means it can sort of fly under the radar by signing smaller artists, but it can’t make deals with any big name artists.

Deals like this aren’t exactly new in the music streaming industry. Apple Music has signed a few big name artists for short-term exclusivity deals. It had deals with Drake, Frank Ocean and Chance the Rapper in its early days but recently it hasn’t done any similar deals.

Source: Billboard