Alphabet Inc (NASDAQ:GOOGL) just invested millions of dollars into a company that could prove to be the final nail in the coffin for the traditional record label model.
Mix Mag has more details on the investment in UnitedMasters, which takes a novel approach to making sure artists retain the full rights to their music:
Lead by former president of Interscope Records Steve Stoute, UnitedMasters recently raised $70 million from Alphabet as well as 20th Century Fox and the venture firm Andreessen Horowitz, according to TechCrunch.
The main concept behind UnitedMasters is to provide artists with services to distribute their music on various platforms like Spotify, YouTube and Soundcloud, splitting the royalties while allowing artists to keep the rights to their master recordings. UnitedMasters also builds a CRM tool and utilizes the analytics to identify listeners in order to target individuals with ads for ticket sales and merchandise.
In contrast, it’s been record labels themselves that retain the rights to recordings in the past. The industry is filled with horror stories of artists signing one-sided deals where a hit record yields them next to nothing, while the labels make out like bandits.
The revolution of digital music changed the game, as consumers are no longer willing to pay $15 for a single album, instead subscribing to Spotify of Apple Music for $10 a month for unlimited music. The record industry has been slow to adapt, hence the opportunity for UnitedMasters to make another dent in their traditional model.
Alphabet Inc shares fell $0.19 (0.02%) in premarket trading Friday. Year-to-date, GOOGL has gained 32.21%, versus a 17.29% rise in the benchmark S&P 500 index during the same period.