Beatport Freezes Payments to Record Labels. Is the end upon us?

1432716374_beatport_mp3best.suBy now, if you follow the business side of the electronic music world at all, or just have a friend on social media that runs a label, then you know that Beatport one of the largest digital music distributors in the world, and the electronic music world’s most important market has decided to delay its payments to labels, apparently due to issues resulting from the recent restructuring and privatization of what was one of the top three online markets for digital music downloads in the world.

But lets play conspiracy theorist for a second (places tin foil hat on). Don’t you think it is unusual that they are announcing their delayed payouts now? Wouldn’t they have known about this potentiality ages ago and either saved capital to payout a percentage of debt or save up enough to keep their top performing labels happy ages ago? I think that it is more likely their recently launched streaming service is generating a loss on the firms books and the delayed payment is because they need to shift assets around to make their payouts. This theory is further supported by the fact that they announced a major cut in payouts from the streaming service to a mere 5% of income generated. One only has to look over to the biggest streaming music firm (which has never had a positive cash flow in its entire history) to realize that the current streaming model does not, and will probably never work. Additionally, in order to launch their new streaming service they moved their successful download business away from its long held domain of beatport to beatportpro (?)…or something like that. I mean seriously, what successful business person wakes up in the morning and thinks; what I should do today is change the url of my incredibly successful business so I can experiment with a new, unproven (if not completely unsuccessful/doomed to fail) business model in its place. You know what? That doesn’t sound like a sound business decision to me either. These fools must have discovered hypestat.com and figured┬áthat if they could run ads on their domain they could make a ton of revenue. The only problem was their incredibly successful business was in the way. That is the only scenario where any of this makes any sense to me. (Takes tin foil hat off.)

The good news is that payments will be made, I am certain of that. But all conspiracies aside, I am not impressed with the recent decisions made by the leadership of Beatport. I feel their lack of understanding as far as their market is concerned may hurt both musicians, labels and fans alike. Makes you wonder why the hell Soundcloud are trying so desperately to make the same mistakes. But let’s talk about that some other time.

 

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