DIY Artists Are Earning Big – And Major Labels Want Their Business – Rolling Stone
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DIY Artists Will Earn More than $1 Billion This Year. No Wonder the Major Labels Want Their Business

Independent artists have exploded thanks to streaming, and labels like Universal Music Group, Sony Music Entertainment and Warner Music Group are starting to get in on the act

Chance The RapperWE Day California, Arrivals, The Forum, Los Angeles, USA - 25 Apr 2019

Chance The Rapper

Chelsea Lauren/REX/Shutterstock

Slowly but surely, independent artists are devouring the recorded-music industry. This, at least, is the view from the major labels, who are watching self-releasing or “DIY” acts gobbling up increasing percentages of global market share — to this day, still a primary performance indicator for the likes of Universal Music Group.

The rise of DIY artists, and the vast consumption of their music, have obviously exploded thanks to Spotify, YouTube, Pandora, Apple Music, et. al, and the ease with which homespun acts can distribute their music to these platforms. U.K.-based Midia Research is the first company to put a number on this trend. It estimates that last year self-releasing artists generated $643 million worldwide, collected by platforms like TuneCore, CD Baby, Distrokid and Ditto Music.

That was up 35 percent year-on-year, and was enough to claim 3.4 percent of the record industry’s total global revenues.That $643 million number, however, deliberately doesn’t tell the full story.

For one thing, there’s publishing to consider. Every DIY artist who writes their own music will be due 100 percent of publishing royalties from any track they distribute via the likes of TuneCore or CD Baby — so long as this cash is properly registered and collected worldwide. And the two aforementioned services, alongside others such as Songtrust and Sentric Music, are set up to do just that.

Broad industry calculations suggest that publishing/songwriter rights accrue around a fifth of the money, per track, that recorded-music rights generate from streaming platforms. Which suggests that you could comfortably add another $100 million onto Midia’s $643 million estimate for 2018 if you were to include publishing in your final tally.

If “self-releasing” artists, with publishing factored in, saw another 35 percent rise in global revenues in 2019, their collective annual income would hit somewhere around the $1 billion mark. Add income streams like sync (licensing music to ads, film and TV, as handled by the likes of Songtradr), plus the monetization/licensing of user-generated YouTube videos, and it looks certain that self-releasing acts will easily generate a whopping 10 figures in 2019 — a number that is only going to escalate in the years ahead.

“We are entering potentially the most transformative era that the record business has ever seen,” says Midia Research MD Mark Mulligan. “The rise of ‘direct artist’ service companies, and a whole host of other commercial models, mean that [unsigned] artists have more choice and flexibility than ever before. These artists can create their own virtual record label.”

What’s more, if we momentarily allow our definition of “independent” artists to move beyond just those who self-release (i.e., DIY acts, or those included in Midia’s $643 million figure), the economics really start to balloon.

If self-releasing artists want to take their career to the next level, they can partner with companies like EMPIRE, Kobalt’s AWAL, Believe Digital, Ditto Plus or Create Music Group. These firms curate their rosters by handpicking signings, before taking on responsibility for distributing, marketing and promoting their music in the style of a record company. Crucially, they allow artists to retain ownership of their copyrights, i.e., enabling these performers, to all intents and purposes, to remain “unsigned.”

As a taste of the additional marketplace here, consider AWAL, which boasts a wealth of successful indie artist signings including Vérité, Rex Orange County and Lauv — with the latter recently surpassing 2 billion lifetime streams. According to Kobalt’s most recently filed public accounts at U.K. Companies House, its recordings division (a.k.a. AWAL), generated $59.9 million in the 12 months through June last year.

But, for now, let’s keep our focus strictly on DIY artists — those who maintain full control of their career and who, working with aggregators, distribute their own music online. For further evidence of the growing commercial heft of this sector, look no further than TuneCore. Arguably the market leader in self-releasing-artist distribution, the company last week announced that it had collected more than $500 million for independent artists within the 18 months to end of March 2019 — a figure that doesn’t include publishing income or money from YouTube UGC. Perhaps even more impressively, TuneCore’s DIY artist earnings hit $86 million in the first three months of 2019, very close to an eyebrow-raising $1 million per day.

Then there’s CD Baby, which was acquired in March as part of a $200 million acquisition by Downtown, the parent company of DIY publishing specialist Songtrust. Spotify is splashing its money in the direction of self-releasing artists, too: The $25 billion-valued streaming company acquired a stake in Distrokid last October for an undisclosed sum. And Bandcamp, which specializes in allowing DIY artists to sell digital and physical music direct to fans, is now generating more than $8 million in sales every month.

Fred Davis is a partner at Raine Group, the global investment bank that is a major investor in fast-growing indie artist distribution/services startup Amuse, as well as the most popular audio streaming service in the world, SoundCloud. “The most exciting and fastest-growing sector to spring out of the music industry’s streaming revolution is the self-published artist,” he observes. “The unsigned artist’s only lane to monetize their talent used to be through performing live, [but now] a thriving new sector has evolved that allows the self-published artist to support his or her craft. It’s the most artist-friendly development in this entire global streaming revolution.”

Dollar signs aren’t the only rapidly escalating numbers in the field. Self-releasing artists are becoming a true volume business, with TuneCore, CD Baby and Distrokid alone now cumulatively representing more than 1.1 million performers. These acts are all doing battle for streams in a daunting online arena: Spotify founder Daniel Ek confirmed last month that nearly 40,000 tracks are uploaded to the platform daily, working out to about one upload every two seconds.

The DIY-artist marketplace, then, is a mushrooming global business, with a heady amount of capital swilling around its edges. It’s therefore no shock that the major record companies — Universal Music Group, Sony Music Entertainment and Warner Music Group — are starting to get in on the act.

A few years ago, Universal launched a TuneCore rival, Spinnup, for self-releasing artists, though it’s fair to say industry discussion, and UMG’s promotion of this initiative, have since gone comparatively quiet. Universal does, though, run two brands — Caroline and the recently acquired InGrooves — that specialize in working with independent artists in a manner similar to EMPIRE and AWAL, taking hot acts who previously self-released, and helping them make more “noise” in the marketplace via major-label-level marketing.

Sony, meanwhile, owns powerful indie distribution and services network the Orchard, which also works with top-tier independent artists, like BTS and Jorja Smith, as opposed to DIY artists. Last year, the Orchard launched its first-ever dedicated global division for its premier independent artists, run by respected Aussie executive Tim Pithouse.

Warner, meanwhile, is currently the major-label group experimenting most aggressively in the DIY-artist space. Last year, it launched Level Music, which is not only a direct competitor to TuneCore, CD Baby, Distrokid, etc., but actually distributes DIY artists’ music for no charge whatsoever. (Other services typically either take an upfront fee or a small commission-based percentage of an act’s royalties.)

The realm of self-releasing artists once seemed like the exclusive preserve of small bands in bedrooms. Now, with a billion-dollar-plus annual payday on offer, it’s firmly entered the realm of big bucks in boardrooms.

Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis and jobs since 2015. He writes a weekly column for “Rolling Stone.”

 

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