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This is becoming a tricky concern for many music companies, with difficult partner decisions routinely arising across distribution, PROs, royalty tracking, metadata, ticketing, mass payment solutions, and, yes, music agencies.
Indeed, many in the music industry are finding it increasingly challenging to replace underperforming partners or entrenched processes, even though the status quo means stunted growth. So what’s the secret to ripping off the band-aid?
Incidentally, the entrenched stickiness of distribution partnerships became a big sticking point in Universal Music Group’s recently-approved acquisition of Downtown Music. For indies, Downtown-owned FUGA became a critical focus — mainly because switching distribution partners is often impossibly hard.
“Switching music distributors isn’t just about uploading tracks to a new platform,” remarked Symphonic Distribution Content Creator Randi Zimmerman. “Behind the scenes, your catalog is tied to an intricate web of metadata. What no one tells you is how fragile those connections can be—you could unintentionally wipe out years of algorithmic history.”
Similar problems emerge in royalty-collection partners like PROs, where swapping horses can lead to switching headaches and lost piles of cash.
Hopping from BMI to ASCAP or the other way around? Proceed with caution, though in the broader royalty-collection sphere, relatively new players like Word Collections have managed to lure clientele like Metallica by simply generating stronger content matches and royalty flows – i.e., a demonstrably different level of revenue.
Binding contracts are also a concern. More broadly, convincing companies to switch entrenched partners isn’t always the easiest conversation – even for companies with strong solutions that will clearly simplify processes and boost revenues.
That includes mass payments heavyweight Tipalti, which recently told DMN that sometimes, convincing a company to switch from an entrenched payment partnership is more challenging than it should be – even when a migration is obviously the best step that could result in multiplicative growth.
Tipalti, a DMN partner, now powers mass payments for a long list of music companies, including Ninja Tune, Splice, Vydia, Create Music Group, Thematic, Spitfire Audio, and the aforementioned Symphonic Distribution. For many of those companies, upgrading to a serious mass payments provider was imperative for growth – with Splice one of the higher-profile examples.
“In the global music economy, staying tethered to legacy payouts vendors can create a glass ceiling for growth due to the manual friction of managing complex royalty splits and usage-based payments,” explained Robert Israch, President at Tipalti.
“For modern music companies, the real concern isn’t just about staying with a legacy vendor, but also the lack of transparency and audit-ready reporting that artists, producers, and rightsholders now expect as a standard. The risk of not changing providers can become an opportunity cost consideration.”
Israch explains how payouts, finance, and Tipalti’s mass payment prowess are a competitive advantage for leading music companies. Post-transition, Tipalti focuses on making the upside obvious to its music company users and letting industry word of mouth rally others who loathe change.
Then there’s the issue of data – and who has access to it.
Back to the quickly unfolding realities of the approved Downtown Music acquisition, many indie labels partnered with Downtown-owned distributor FUGA are now determining their next steps. Ahead of the European Commission’s approval of the deal, indies expressed concern that the FUGA acquisition would grant Universal Music Group visibility into vast amounts of indie label data.
But according to details shared with DMN, many indies will remain with FUGA despite concerns about data arising from UMG’s acquisition. It’s a classic cost-benefit analysis, and given FUGA’s distribution chops and the pain of switching, it might simply be too difficult for many indies to switch distribution partners.
But when does it make sense to undergo a foundational switch?
Industry players told DMN that switches are typically worth the investment only if there’s an extremely obvious upside – and not switching will clearly result in broader problems and negative growth.
As CD Baby founder Derek Sivers once stated, “If you’re not saying ‘Hell Yeah!!’ about something, say no.”
For Splice – one of Tipalti’s prominent music industry partners – the previous ‘partner’ was much more time-consuming to manage, requiring them to operate across disparate, outdated systems that needed an overhaul. The choice was obvious.
“For a batch of 900 royalty payments alone, it would take me two weeks,” Splice accountant Nas Yaqoobi relayed. “I knew that we needed a new automated platform. In terms of scaling, we’re definitely set up for success. Our payments process is no longer a huge burden on finance anymore.”
