How to Fix Spotify’s Business Model and Save the Music Industry
When consumers are trained not to pay for music, what can Spotify do to become profitable?This article originally appeared on Digital Music News
Wall Street doesn’t care that Spotify isn’t profitable. They care that Spotify doesn’t have a realistic plan to become profitable.
That’s a big difference.
So how can Spotify become wildly profitable, for decades to come?
The answer is to change their relationship with the major content owners: Universal Music Group, Warner Music Group, and Sony Music Entertainment. Those are the three major labels, and all of them are resolutely focused on their own profitability. And drowning Spotify in debt and over-leveraged investments in the process.
That’s capitalism. Go figure.
But what if Spotify started its own label? Yesterday, I jokingly called this ‘Spotify Records’. But whatever it’s called, it could become the world’s fourth major record label. And pretty quickly, it could start attracting the world’s greatest artists, while offering the best deals in the world.
How great would these deals be?
Imagine signing the next Drake, but giving him full control over his copyrights, for life. The major labels demand a cut of everything: recordings, publishing, touring, advertising, your first born. Whatever your genius mind devises, they get a cut.
But Spotify wouldn’t demand any of that.
The only catch? You have to license your music for free to Spotify, as long as they exist. And in return, you’ll even get a cut of the streaming revenues generated on their platform.