Spotify: disrupting the business of music

For the past sixty years, there have been between 4-6 major music labels. With the rise of digital and the internet, many analysts suggested that we would see a massive disruption (and destruction) of these labels.

“I don’t even know why I would want to be on a label in a few years, because I don’t think it’s going to work by labels and by distribution systems in the same way. The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it”- David Bowie

(excerpt from the 2002 New York Times article “David Bowie, 21st Century Entrepreneur” by Jon Pareles)
Via: Ashraf El Gamal Thesis

To be sure, we have seen disruption, but we've seen the most evidence of this in the distribution of music as opposed to the promotion of music. This isn't to say that the major labels haven't been affected: we've seen consolidation from six to four major labels since the 2000s, and we've seen the growth of indie labels to a now estimated 35%. But, that still means that major labels control 65% of the market share - not quite the total decimation predicted by Bowie (and those aforementioned analysts).

Which is why it's notable to see the charts shared by Peter Kafka, Recode, featuring five charts from independent artists (Guordan Banks, Michael Brun, Elohim, R3hab and Verite). In these, we see visible and sometimes massive bumps in the number of times these artists are streamed after being featured on Spotify's "New Music Friday" playlist.

Visible increase in user streaming featured in Spotify's "New Music Friday" playlist (Image: recode)

Visible increase in user streaming featured in Spotify's "New Music Friday" playlist (Image: recode)

In a similar manner in how major music labels controlled both the distribution and promotion of music, we now see Spotify assuming a similar role of influencing, if not controlling, both.

And Spotify's position as a power-broker is growing. This chart from Nate Rau of The Tennessean, shows the massive growth of paid streaming services: 

Doubling in paid streaming growth in 2016 (Image: RIAA)

Doubling in paid streaming growth in 2016 (Image: RIAA)

For scale, Spotify has 50 million subscribers compared to Apple's 20 million in 2016.

It's still probably too early for new music to completely shun the major labels, but excepting the timeline of a decade, Bowie was certainly right about this: "The absolute transformation of everything that we ever thought about music will take place [...], and nothing is going to be able to stop it."