Can music-streaming service providers turn into music labels?

Frank Ocean’s chart-topper “Blond”, is signified as a unique release for many different reasons, the most obvious being that, just a few days prior to its release, the artist/performer bought the rights from Universal, by paying back approximately 2 million dollars covering all production costs. This means that the album is now officially self-released and that Frank will receive all payments regarding the album’s sales, either as a digital download or from music-streaming services like Apple, Spotify, and Tidal.

Rumor has it, that the investor behind this bold move is none other than Apple itself, who lent the money to the artist in return for exclusive rights to the album’s digital distribution, at least for the first weeks of its release. In spite of the fact that this rumor remains unconfirmed, the case poses a very real possibility in regards to the music-streaming services providers’ potential future as not only distributors but also producers of original music content.

In the movie world, Netflix and Amazon took the big step towards producing original content quite a few years ago, and the move was met with applause by both the artists and the audience, primarily because, quite simply, it is better to have more content and more outlets to sell one’s creativity than less. So why should things be different for music-streaming providers like Apple, Spotify, and Tidal?

Well, the most obvious reason is that, if the three major digital music retailers, decided to go that way, their negotiating power would be infinitely more than what Netflix and Amazon have, in the movie/TV world. Digital distribution, including one-off sales and music-streaming, is rapidly gaining share in the wallets of customers and in the music labels’ revenue reports. And Apple and Spotify have very big chunks of market share and therefore large negotiating power over music labels and artists. If they chose to produce, and of course distribute, their own content, who could stand in their way?

One other reason, there might be that the digital music distributors lack A&R departments and therefore the ability to discover and nurture new talent. But that skill is transferable and already Apple and Spotify boast about their teams of music experts that work relentlessly to match the subscribers’ tastes with music similar to what they have disclosed they like.

Finally, regarding an album’s production costs, current music technology allows for most artists to create recordings with professional quality, for just a fragment of what the cost was in the 1980’s and 1990’s. So, the artists could quite easily produce their own records and then sign deals with Apple or Spotify for digital distribution and promoting their work through the sophisticated digital platforms that more and more people engage with each month.

If this happens, and the rumor we mentioned at the beginning of this post turns out to be true, Frank Ocean’s album will be unique for one more reason: it would signify Apple’s first release as a music label.

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