Barrier to creating new music is much lower than for a TV show or movie, so record labels generally have much less power over the industry than TV/film producers & distributors. Services like Spotify and Apple Music can always go to artists directly, so it's in the record labels' best interests to negotiate in good faith.

Spotify is producing their own music. Those recommended playlist of piano music, chill, or whatever general theme with artists that you have never heard about? That is because it has been produced by them is only available there.

Probably not at the same scale as Netflix and the sources on how common it actually is seems limited, but interesting nonetheless.

Edit, apparently Spotify has refuted this. Imo, it would make sense for Spotify to do this, so not sure what to think https://www.theguardian.com/technology/2017/jul/13/are-spoti...

That's an interesting idea though, like basically "Spotify as a record label." They could sign & develop talent, maybe develop a distinctive in-house style, have a whole Brill Building type thing going on.

I watched a video on this subject a while ago; it posited that while Netflix will be able to increase their profit margins, because they pay a fixed amount for licenses (and now their own content), whereas Spotify has a pay-per-play structure. Meaning, Netflix's profit margins are flexible, while Spotify's will grow and shrink equally to their subscriber count.

Which is fine of course, as long as it's sustainable AND artists earn a fair amount. Which for Spotify is debatable, in that as an artist you can't make a living off Spotify unless you have millions of streams.

Here in the USA: Spotify: $10/month Netflix: $9/month

I'm unsure how Spotify and the Artists are not making good money. Are the record companies syphoning off all the profits?

Ben Thompson's been talking about this a lot recently. The tldr is this is a big reason why Spotifys been making a big push into podcasts, because its hard to impossible for them to make money because of how the value chain works I music.

Ben Thompson on Spotify: https://stratechery.com/2018/lessons-from-spotify/

He does list as one possiblity that Spotify will one day cut out the labels from the value chain. I personally think it is inevitable; the labels used to source, market and distribute music, and there is nothing (except the "admission cost") that I can see will prevent a distributor such as Spotify to become a label. Spotify has a strong brand name which can be leveraged as a strong asset for "great music" if they do it right, whatever that means. Can't see them put other labels out of business though. Their blue ocean can be to completely ignore physical and go fully virtual, perhaps even as far as offering immersive 3D concerts online, with artists that never appear in person - or perhaps in the future with virtual artists that never even existed irl.

There is also nothing inherently wrong in just being a distributor. Sometimes harvesting a stable profit over decades is better than growing like cancer and then crashing because you're yesterday's news. However the record labels are a threat against the stability and hence it is most likely that Spotify will push to become independent, just like Netflix.

> there is nothing (except the "admission cost") that I can see will prevent a distributor such as Spotify to become a label.

1. The record companies won't be happy with Spotify encroaching on their turf and will take their music away (see: Netflix).

2. There's far more to record label activities than releasing music. Production, promotion, marketing, distribution. How do you make a name for yourself in the modern music landscape when anyone can upload their music onto Spotify? Name a popular artist that doesn't have a large record company behind them, besides Chance.

It won't be too long, I'm sure, before Spotify gets into the market of licensing music for podcast productions, allowing them to double-dip - once during production, and again upon release.