by Cherie Hu
When a Forbes Hip-Hop Cash King boasting 24 million records sold and a social media following of 40 million chooses a four-person startup with no venture capital funding to distribute his music, you know a tectonic shift is happening under your feet.
Ludacris started his career as an independent artist. He saved up $20,000 over five years to finance his first album Incognegro, which was released in May 2000 through his own label Disturbing Tha Peace (DTP) Records. That same year, DTP began operating as a subsidiary of Universal Music Group’s Def Jam Recordings, but the unusual release of “Vitamin D”—most of DistroKid’s clients are unsigned, DIY artists—suggests that Ludacris has parted ways with the major distribution infrastructure, and returned to his indie roots.
Rewind to February 2017, when prolific hip-hop artist DJ Jazzy Jeff, who first rose to fame alongside Will Smith as DJ Jazzy Jeff & The Fresh Prince, worked with over 30 collaborators to record his new album Chasing Goosebumps in just seven days. Jeff not only documented the entire recording process on Facebook Live but also decided to release the album independently through a distributor called Stem.
“I’ve been doing music professionally for over 30 years, and this was the first time I ever had full creative control,” Jeff told me. “I don’t normally get that emotional on projects, but when we finished up the album and I sat down and listened to it from beginning to end, I broke down.”
Stem gained recognition that same month as the distributor behind Frank Ocean’s album Blonde, whose stealthy release strategy circumvented the major-label system and sent shockwaves through the music industry. The Los Angeles-based startup touts a more public profile in the tech world than most other distributors, having raised $4.5 million in April 2016 from the likes of Upfront Ventures, Gary Vaynerchuk and artist-management magnate Scooter Braun.
Similar to DistroKid, Stem’s main selling points are its clean, artist-friendly dashboard interface and its automated, consensus-based model for royalty splits. “It was the perfect slam dunk: we cut up the revenue pie evenly and easily without any transparency issues so that we could just focus on our creativity,” said Jeff. “Three days after we finished the album, it was up on every major platform, and now I know exactly how much money I’m making from it.”
This incremental shift of major artists toward indie distribution suggests that the idea of a level playing field in the music business is not as far-fetched as we may think. Commenting on Ludacris' move, DistroKid CEO Philip Kaplan wrote that “musicians at all levels increasingly have access to the same platforms used by the most successful artists in the world.” What is perhaps even more important is that the logic also travels in the other direction: the most successful artists in the world are now demanding access to the same tools used by DIY creators.
The concept of an “indie distributor” is neither new nor small. Some of the biggest players in the field, including CD Baby and Sony-owned The Orchard, were founded pre-Napster. DistroKid uploads nearly 600 new albums daily and paid out $2 million to its artists last month, while competitor TuneCore pays its artists over $40 million in total every quarter. Frank Ocean and pop-rap duo Jack & Jack are just a few examples of independently distributed artists who have topped the iTunes album charts.
Business models vary across distributors. CD Baby takes a 9% commission on digital sales atop fees of $9.95 per single and $49 per album; TuneCore charges similar fees for singles and albums, without taking a commission. Stem charges a 5% commission without any per-unit fees, while DistroKid bills a flat annual rate of $19.99 for unlimited uploads. Those with commission fees are incentivized to advise artists on digital strategy and playlist placement, fully embracing their role as artist service providers, while DistroKid “makes $19.99 a year per artist, whether their albums make a million dollars or nothing at all,” Kaplan told me. “Our incentive for helping artists get on key playlists to drive streams and growth is purely for the artists' own good.”
Two trends raising the profiles of indie distributors across the board are the capability of artists to interact directly with their fans through social media—as Ludacris and DJ Jazzy Jeff accomplished through SMS and Facebook, respectively—and the unprecedented rise in streaming income.
This article first appeared in Forbes
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Contributor: Cherie Hu @cheriehu42
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