The Spotify Acquisition That Nobody Talks About
From 1999 to 2015, revenue across the entire music industry was in a steady state of decline. However, since 2016, Spotify (NYSE: SPOT) and other streaming services have helped return the industry to growth once again. But there's one small company that's pioneering change, and Spotify owns a minority stake in it. Here's why DistroKid could be a massive game-changer for not only Spotify but the music industry at large.
In Sept. 2018, Spotify introduced a private feature that would allow artists to bypass the labels and instead upload their music directly to Spotify. However, after less than a year, the company decided to shutter the project. While management didn't explain why, it's no secret that a feature of that sort would compete directly with the major music labels who are responsible for providing the bulk of Spotify's content.
However, without making much noise, Spotify had also disclosed a minority investment in the digital music distribution service DistroKid. The service allows hundreds of thousands of independent artists to distribute albums or soundtracks to all of the major streaming platforms. In exchange, DistroKid charges an annual rate that varies depending on the number of artists under each subscription. This also allows the artists to keep the ownership rights to their music, so they can keep a bigger chunk of their streaming revenue. For independent artists, DistroKid provides the easiest path to widespread distribution.
Source Fool.com
