When it comes to music distribution, artists should beware of the industry’s tourists

The following MBW op-ed comes from Nick Gordon, Chief Client Officer and General Manager of Symphonic Distribution (pictured). Launched in 2006, distribution and services company Symphonic has worked with artists including Marshmello, Daddy Yankee, Gunna, Calma Carmona and Nicky Jam. Symphonic’s range of artist services include marketing, monetization, rights management and more.

This week, Spotify announced that its six month experiment with disintermediating distributors, and allowing artists to upload direct, is over.

Three weeks ago, Stem announced that they were flushing their system of low-selling artists and doubling their fee.

In this dynamic marketplace, what’s the takeaway?

Takeaway One:
  Picking an established distributor with a sustainable business model is of paramount importance.

Running a valuable, reliable, and sustainable distributor is complex, expensive and isn’t for short-term opportunists or companies looking to tack on a new business model.

For a couple decades now, I’ve had the pleasure of working for some of the best distribution companies ever built. Most recently, at the boutique, 100% independent Symphonic Distribution.

During the first generation of digital distribution, while working at what used to be independent, (now wholly Sony-owned) The Orchard, I saw a ton of competitors pop up who engaged in a “race to the bottom” in distribution fees – enticing artists and labels with single-digit % deals and the offer of unbelievable service.

One by one, we watched them run out of money and either close shop or sell, leaving thousands of artists and labels in the lurch.

“One by one, we watched them run out of money and either close shop or sell, leaving thousands of artists and labels in the lurch.”

Fast-forward a couple of chapters and streaming revenue is through the roof. Dozens of new, DIY-style distros have popped up with incredddddddible offers for artists, each more ‘disruptive’ than the last.

The idea of artists gaining the ability to cut out traditional intermediaries – labels and ‘frontline’ distributors – and put their music directly on DSPs is now firmly established. And, all things considered, there’s nothing inherently wrong with the concept of a company delivering files for a flat fee.

What is problematic is some of the bullshit marketing pitches today, which dangle the allure of a more “fair”, more “supportive”, more “artist-friendly” model. Because, without massive volume, the DIY distro model simply isn’t profitable – meaning that flat-fee or low fee distributors have to figure out how to run a business on razor-thin margins, or with high customer acquisition costs, or with revenue only trickling in. Or all three.

The first thing to get cut when these pressures bite is customer service; then, set your watch for 30 days and watch your inbox for an email that says, “We tried and helped thousands of artists get their music out…” followed by news of a pivot.

Then, like Keyser Soze… poof, you’ll never hear from these companies again.

There’s nothing artist-friendly about persuading artists to come crash at your house of cards.

Those of us in the trenches know it’s the small artists who need the most attention… and who generally do not earn much.

Back in the day, distributors understood this, and didn’t even try to work directly with artists. That was the role of another value layer: independent record labels…

Takeaway Two: In this Playlist-driven, music-as-contextual-entertainment world we’ve created, we need to rethink and re-prioritize indie labels as curators and guardians of indie artists.

The music industry is alive and well again and streaming services have made it easy to discover new music, but let’s not confuse the issue.

Spotify, Apple, Amazon, and Google aren’t music companies. They are streaming content suppliers within multiple-vertical, consumer-shopping destinations.

We need to place a higher value on the brave women and men who are true music people, savvy business people, and LIFERS to protect our artists – because tourists ultimately go home.Music Business Worldwide

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