The game really did just change. Spotify has recently launched a new feature which will enable independent artists to upload tracks to the service directly. No longer will there be any requirement for a third-party aggregator or record label.
Currently, the feature remains in invite-only beta mode. Only a few select United States artists are currently able to upload directly to Spotify. However, Spotify states that in the future, more and more artists, labels, and teams will have the ability to upload directly to their platform.
Artists will be able to access the upload function via the Spotify For Artists platform. At the end of June, the platform counted over 200,000 verified acts amongst its monthly user base.
This move has long been anticipated. In July, the firm’s CEO, Daniel Ek, reiterated to investors during the Q2 earnings call that he ultimately wants to create a “two-sided marketplace” serving both consumers and musicians. Daniel Ek stated his goal with Spotify is to get as much music onto the Spotify platform as possible. At present, Spotify averages about 20,000 tracks a day.
Two months ago, Spotify launched a tool that enabled acts to directly submit music for considered inclusion on first-party playlists.
Artists can schedule the release date on which they want their music to appear ahead of time. Several independent artists have already tested features like this behind the scenes.
Surprisingly, however, the upload feature is completely free. In the beginning, Spotify will not charge any upfront fees for uploads, regardless of how many tracks an artist submits. Furthermore, Spotify also isn’t charging artists any additional commission on the royalties generated by this music.
This cost-free approach sits in stark contrast to existing third-party digital aggregators/distributors such as CD Baby, TuneCore, Distrokid and Ditto. All of these companies either require a one-off upload fee or a yearly subscription payment from artists.
All things considered, one must question how long the company will not charge for this service. In that same July earnings call, the firm’s CFO Barry McCarthy predicted that building a successful “two-sided marketplace” would help improve Spotify’s gross margins. This inevitably would entail using it to make more money.
However, for now, the music streaming company seems happy to absorb the costs of running a user-upload service, in order to quickly build a global community of engaged musicians. Perhaps in the future, the company may begin charging for this and other tools.
The Spotify blog explains the non-payment structure:
Just like releasing through any other partner, you’ll get paid when fans stream your music on Spotify. Your recording royalties will hit your bank account automatically each month, and you’ll see a clear report of how much your streams are earning right next to the other insights you already get from Spotify for Artists.
Uploading is free to all artists, and Spotify doesn’t charge you any fees or commissions no matter how frequently you release music.
Daniel Ek made the following statement in July:
We’re really building a two-sided marketplace that provides tools and services for labels and artists… Our goral is to get as much music onto the spotify platform as we possibly can.
Berry McCarty also made a statement regarding this tool.
If we’re successful in building a two-sided marketplace and developing the tools to won demand creation, then I think we’ll land comfortably in [a 30%-35% gross margin range].
Comparisons with Soundcloud
This news is well received by artists. However, third-party aggregators, major record companies and, competitive interests such as SoundCloud are unlikely to welcome the news.
For Spotify, this is an aggressive move into user-uploaded audio content, a domain that traditionally belonged to SoundCloud. In comparison, Soundcloud offers artists the chance to upload unlimited tracks, plus access to insight tools. SoundCloud also offers a free, limited option, however, it caps a user’s total uploads at three hours of material. As an alternative, Soundcloud sells Pro (Unlimited) accounts for $15 per month or $135 per year.
Spotify has stated that its new upload tool will only be open to those parties who entirely own the copyright of their recordings. In addition, the company put filter systems in place to prevent potentially infringing content from getting uploaded.
Kene Anoliefo, Senior Product Lead at Spotify’s Creator Marketplace, confirmed that cover versions are permitted to be uploaded.
Earlier this year, Level Music had also quietly launched online. It offers independent artists the opportunity to upload their music across multiple platforms. Level promised artists the chance to release their music everywhere for free. Although, at the time, the platform reserved the right to charge a commission on royalties.