Spotify has been striking deals directly with independent artists, a move that is reportedly worrying major labels who Spotify have historically relied upon for a large slice of their streaming catalogue.
Direct deals offer a platform and exposure for smaller artists, which further undermines the power that major labels have in the music industry, reports the New York Times.
These deals often involve advances to management companies that represent unsigned or up-and-coming artists. This also removes the middle man of a label taking a cut of the revenue that goes from the platform to artists.
The direct deals without labels’ involvement also mean artists are able to maintain ownership of their recordings.
The ‘Big Three’ labels of Universal, Warner and Sony provide a huge amount of the platform’s music and reports suggest they are not happy with these direct deals.
Another point of contention is the new provision of videos from some major labels, with a dispute arising over how much they should owe the labels for the use of these videos.
Spotify reported net losses of €394m for just the 2nd quarter of this year.
Warner Music Group in fact liquidated its entire equity in Spotify this year, which delivered $504m.
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