CHANGING LANDSCAPE

“The landscape for labels is changing rapidly,” says Kris Jones, Licensing and Publishing Manager for Hyperdub. “Labels the size of Hyperdub constantly have to be looking out for new ways to diversify in the current climate, not just [in terms of] revenue streams, but how we work with artists, how the music is curated, released, promoted – everything.” He continues, “Any extra income for a small indie is important to invest back into the label, its artists and events... but nothing is guaranteed in the licensing world. We can go months without anything and then score three decent licenses in a month. It’s very unpredictable.”

There’s also potential revenue from streaming services, especially for larger indies like Hyperdub. “Streaming revenue is our biggest income [stream] for the label,” says Jones. Yet on the whole, electronic music is lagging behind other genres when it comes to knowledge of and engagement with streaming platforms. Many artists and labels are unaware of basic facts about how the streaming economy works, what these platforms pay, and how music even lands on the various sites in the first place. The payment issue tends to take priority in most people’s minds, and a lot of the news hasn’t been good.

Streaming platforms are notoriously tight-lipped about their royalty and payout models, but it’s well known that they’re generally paying fractions of a penny for each listen. There are slight differences; Apple Music pays more than Spotify, which pays significantly more than YouTube. But regardless of the platform, the current system is one where artists with thousands, or even hundreds of thousands of plays, are receiving only a pittance – and that’s before their labels, managers, distributors, and other industry players have taken their cut.

THIRD PARTIES

Complicating matters further, to qualify for the possibility of earning, artists and labels first have to get their music onto streaming platforms. With few exceptions, it’s nearly impossible for artists to directly upload their music onto Spotify, Apple Music, YouTube Music, Amazon Music, Deezer, and most major streaming platforms. Spotify did beta test a program which allowed direct artist uploads, but elected to end it earlier this year. Even Beatport requires artists and labels to enlist a third party to get their releases in the shop.

Those third parties generally come in one of two forms: digital distributors and aggregators. The former are often outgrowths of physical distributors, which work directly with artists and labels to to sell physical records to shops globally; in the digital realm, they’ve expanded their business to include placement of music on online stores and streaming platforms. But whether or not these companies traffic in physical releases, the business model for digital distribution is usually straightforward: they take a flat percentage of all digital revenue, whether it’s from online sales or streaming.

Aggregators are a different animal. There’s some overlap with digital distributors – many aggregators see digital distribution as just one facet of a larger suite of “label services”, which revolve around marketing, promotion, and sync licensing – but these companies’ primary function is still placing music on streaming platforms. There are dozens, if not hundreds, of aggregators out there, each with its own features and specialties. Some, like AWAL, Stem and Symphonic, are selective, functioning like quasi-labels by working with artists they perceive as having a chance to make it big.

More common, however, is the open approach of outfits like CD Baby, Tunecore, DistroKid and ReverbNation. They will work with just about anyone, as long as the artist is willing to pay an up-front fee and/or surrender a percentage of any digital revenue. By casting a wide net and aggregating releases from large numbers of artists, they’re able to then work directly with big streaming outlets like Spotify and Apple.

However, few of these aggregators seriously traffic in underground electronic music. Many of the larger companies don’t even place music on Beatport, let alone more niche outlets. (Some of the aggregators that do work with Beatport include ReverbNation, Symphonic, Ditto, Label Worx, Horus Music, The Orchard, Fuga, and Dancephonic, amongst others.)