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Spotify Acquires a ‘Passive Minority Stake’ in Distrokid — and Gives Distrokid Subscribers Preferential Access + Distribution to Other Platforms

Posted on November 06, 2018
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Spotify Acquires 'Passive Minority Stake' in DistroKid

Spotify has just announced a serious alliance with digital distributor Distrokid — one that includes preferential access to Spotify and even distribution to competing platforms.

Just last month, Spotify announced a beta-level feature that allowed artists to directly upload their content onto Spotify’s platform.  Now, Spotify has seriously upped the ante by forming an alliance with one of the biggest digital distributors: Distrokid.

Just last night, Digital Music News reported on a preferential deal between Spotify and a select group of distributors, with Distrokid leading the pack.  Those deals granted artists preferential access to ‘Spotify for Artists,’ which is required for the direct-uploading beta (and eventually, the broader direct-uploading release).

Looks like we were onto something — but only reporting on the tip of the iceberg.

Spotify’s direct-uploading announcement theoretically allows artists to bypass third-party distributors.  But distributors immediately responded that artists need the entire ecosystem of streaming (and download) services, with Spotify just one piece of the distribution puzzle.

So they weren’t going to put digital distributors out of business, after all.

Except that Spotify has now addressed that critical issue.

Alongside its ‘minority investment’ in Distrokid, artists will not only get preferential ‘Spotify for Artists’ access, they’ll also receive distribution to other, competing streaming platforms.

We’re not sure of the exact mechanics of how this will operate.  But it looks like Distrokid members will not only get preferred Spotify access, they’ll also be able to push to competing platforms at a sharp savings.

If not entirely for free.

Here’s the full announcement, posted on Spotify’s blog.

Today, we’re happy to announce plans to enhance Spotify for Artists by enabling artists who upload to Spotify, via our recently announced beta feature, to seamlessly distribute their music to other platforms through DistroKid.

For the past five years, DistroKid has served as a go-to service for hundreds of thousands independent artists, helping them deliver their tracks to digital music services around the world, and reaching fans however they choose to consume music. The service has been a trusted and reliable partner to Spotify, which is why they’re a natural choice to enhance the experience for artists using our beta upload feature. As part of this partnership, Spotify has made a passive minority investment in DistroKid.

We’re excited to roll out this new technical integration in the near future, and hope to share more information soon.

Despite CEO Daniel Ek’s denials, Spotify’s increasingly acting like a music label – infuriating labels and publishers in the process.

But, the company hadn’t really worked with outside distributors — but that is obviously changing.

Quietly unveiling a new list, the company confirmed its five preferred distributors – DistroKid, EmuBands, CD Baby, The Orchard, and FUGA.  Noticeably absent were several major players – AWAL, Tunecore, Ditto Music, Symphonic, and ReverbNation, among others.

That preferential list has actually been quietly sitting on Spotify’s FAQ section for weeks, though we first reported on it yesterday.

The passive minority stake means the service won’t have any direct control over Distrokid’s business.  So, the distributor will continue to operate normally.  Of course, that doesn’t preclude Spotify from assuming a greater share later, expanding its partnership further, or outright acquiring Distrokid at some point in the future.   In fact, all of those are very distinct possibilities.

Artists who upload their music directly on Spotify will still have control over their music.  In addition, the company won’t see other data shared on the service.

Today’s announcement unveils more of Spotify’s long-term planning.  The company could soon become the ‘go-to’ platform for indie and DIY artists — if not a substantial percentage of all artists.

Just picture this.  Free direct uploads on Spotify.  Complete control over your works.  And, easy-to-handle distribution onto other rival streaming music services – Apple Music, Amazon Music, Deezer, TIDAL, YouTube Music – through Distrokid.

No wonder competing digital distribution companies are ‘freaking out,’ according to one well-placed source.  But we’ll have more on that later.

 


Featured image by Distrokid.