Music labels: a rake too far

In 2013 Bill Gurley wrote a blog post titled A rake too far: Optimal platform pricing strategy. It’s an amazing guide to how much middlemen take in different industries and leads to the conclusion that if you’re taking more than 10-20% out then you are ripe for disruption. It is one of the top two posts that I refer entrepreneurs back to (the other is Fred Wilson’s Employee equity. How much?).

I’m thinking about that today because I’ve just read that music labels keep 73% of the money paid to them by music streaming services Spotify and Deezer. The artists and songwriters get just 27% between them.

labelpayout

That is definitely a rake too far. Bandcamp and others have been after this market for a while, but labels are ripe for disruption. Have been for a long time.

  • Shodement

    Hello Nick, this blog explains exactly the sort of problem Shodement will solve in the near future. A world where artists and songwriters are going to be able to make a living from music and getting 80% of the pie. Thanks for sharing this and keep up with the great content! Huge fan of your work and way of thinking.

  • http://www.theequitykicker.com brisbourne

    Thank you!