Sunday, November 17, 2013

How Music Management Rollups Could Affect Music Tech’s Future

Deezer image
We’re living in a very interesting time in the music business. Unlike when the industry was caught off-guard by the MP3 revolution, the powers that be are totally on top of the one that’s happening now - streaming music - and they’re being proactive about dealing with it. Interestingly enough, they’re way ahead of the curve this time, even before the majority of the public. Let’s look at how this is playing out.

The first step in trying to take control of the situation came when the major labels pushed Spotify for an equity stake as part of the licensing deal that let it enter the US market. The labels weren’t about to lose control again like they did with iTunes a decade earlier, so this was a condition for the deal. Now with Spotify’s biggest competitor Deezer about to enter the US, you wonder whether the labels are asking for the same agreement. My guess is that they won’t get it this time, since they’re not in the same position of strength that they were even a year ago, as more deep pocketed competitors are already in the marketplace where there was no way the labels could get equity (like with the recently introduced iTunes Radio) and new ones are about to be introduced (like YouTube Music which had it’s deal in place before Spotify’s). 

A bigger problem for the record labels is that they’re no longer the pinnacle of power in the music business - managers are. Modern music management now includes many of the former duties of a record label, like marketing and promotion, as part of its core offering to an artist. And with artists now capable of ably recording their own masters without a huge financial outlay, the banking services of a label are no longer needed either.

That’s why some of the recent deals involving managers are interesting, because it can put them and their artists into a more leveraged position with the various music tech services. There are three very recent examples. Read more on Forbes.

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