Wall Street doesn’t care that Spotify isn’t lucrative. They care that Spotify doesn’t have a realistic plan to eventually become prosperous.
That’s a significant difference.
So just how can Spotify become wildly profitable, for decades in the future?
The solution is to change their relationship with the leading content owners: Universal Music Group, Warner Music Group, and Sony Music Entertainment. Those are the three major labels, and these are resolutely focused on their very own profitability.
That’s capitalism. Go figure.
However, what if Spotify started its own label? I called this ‘Spotify Records’ yesterday. But whatever it’s called, it may end up being the world’s fourth important record label. And quite fast, it could start attracting the world’s greatest artists, while offering the very best deals on the planet.
Envision giving him total control over his copyrights, although signing the following Drake . The labels that are major demand a reduction of everything: your first born, records, publishing, touring, marketing. No matter your genius mind devises, they get a cut.
But Spotify wouldn’t need any of this.
The sole catch? You must license your music to Spotify free of charge, provided that they exist. And you’ll even get a piece of the streaming sales produced on their platform.
But Apple Music’s royalties? You can keep those. Actually, Spotify Premium Accounts Records will gladly allow you to and Apple negotiate your royalties. Just like the pros at Universal Music Group, Sony Music Entertainment, and Warner Music Group.
While Spotify isn’t so Apple’s paying for the music.
Spotify Records can market their particular music, by pushing it to the very best of the coveted playlists. And they can hire the best a&r and to build executives advertising a stable of newer superstars .
Who’d you rather sign with?
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But over time, their little label enterprise would grow to become as large as the majors. Which means the aggregate price of content starts to fall.
Which also means that over time, revenues start to grow quicker than licensing costs. And profitability becomes a real factor.
See where this is going?
But this isn’t only an unwarranted brainstorm. Already, the streaming giant is making moves to come up with their very own artists. Josh Constine of TechCrunch discovered that out. “If Spotify owns the rights it’s who makes the royalty payouts,” Constantine shared. “ That two sources tell TechCrunch that Spotify has discussed traditional record label-style deals with artists.”
Let’s advance this scenario a few years ahead, shall we?
‘Spotify Records’ is ranked third. They’ve because Wall Street finds a fruitful strategy for future profitability, gone public.
Fresh with IPO cash, the world’s largest streaming music company decides to purchase among the other major labels. And suddenly they’ve 40% label market share. With a possibility to reach 50%.
Amazon’s too busy assembling a drone delivery infrastructure to give attention to its music platform. And Spotify has 400 million.
In fact, they’re extremely lucrative.
They’re becoming paid. From music fans who are paying them. You can forget non- payments and accounting that is twisted.
Netflix is making their own content. So can’t Spotify? Welcome to the actual future of the music industry.