DATE: 14 – 07 – 2025 | AUTHOR: Viktor Jensen | TAGS: Music Industry
Disclaimer:
This article reflects publicly available information and analysis as of 2025. While efforts have been made to ensure accuracy, the information presented may not be complete or 100% accurate. Where distributor relationships, financial figures, or platform practices are mentioned, they are based on publicly documented sources, official statements, or commonly reported industry observations. Readers are encouraged to independently verify any current agreements, statements, or business relationships directly with the relevant providers or companies, as these may change over time.
Introduction
The music industry is marketed as more open than ever: anyone can upload their songs, and streaming makes it possible to reach the world. But behind the scenes, an invisible access structure operates — where only those already “inside the system” truly benefit, both financially and in terms of exposure.
There are no formal exclusive agreements between the major labels, Merlin Network, and streaming platforms like Spotify or Apple Music. But in practice, market access is so restricted that it amounts to functional exclusivity — raising the question of whether this may violate EU competition law.
A Brief History of Access in the Music Industry
The music industry has undergone radical transformation since the days of vinyl. In the mid-20th century, access to the market was largely physical — limited by the cost of pressing records, distribution deals, and radio promotion. Only those signed to major labels had the resources to reach a wide audience.
With the introduction of the CD in the 1980s, production became more affordable, but gatekeeping remained strong. Labels still controlled physical distribution, shelf space in stores, and access to media coverage.
The digital revolution in the 2000s, led by MP3s, Napster, and eventually iTunes, disrupted these structures. Suddenly, artists could distribute music without pressing physical formats — but visibility still depended on marketing budgets and label influence.
Then came streaming, starting with Spotify in 2008. On paper, this democratized music: anyone could upload their songs via aggregators. But as algorithms, curated playlists, and exclusive distribution pipelines emerged, new forms of gatekeeping replaced the old ones — more invisible, but just as powerful.
Today, access is digital — but not truly open. The old barriers of vinyl and shelf space have been replaced with metadata filters, algorithmic visibility, and institutional affiliations. Monopoly culture has evolved, not disappeared.
What is Merlin – and Why Does it Matter?
Merlin Network is a non-profit licensing organization representing thousands of independent labels worldwide. It negotiates collective licensing agreements with digital service providers (DSPs), enabling its members to access platforms like Spotify and Apple Music.
To become a Merlin member, you must already have music released on DSPs.
This means that new or small labels cannot become members until they’re already on DSPs. And since Spotify and others apply similar thresholds — such as minimum listener metrics, catalog stability, and streaming volume — a self-reinforcing barrier emerges that systematically excludes smaller players.
Indirect Gatekeeping – Without Formal Exclusivity
There is no public documentation proving that DSPs hold exclusive contracts with Merlin or major labels. But in practice:
- DSPs impose strict access requirements that few small players can meet.
- The only realistic way in is via Merlin or aggregators (such as DistroKid, FUGA, The Orchard).
- Major labels and some “super indies” enjoy direct access that others do not.
This creates an access structure that may violate Article 102 of the Treaty on the Functioning of the European Union (TFEU), if it effectively restricts competition.
Source: EU Commission – Article 102 TFEU
The Problems Behind Modern Music Distribution Models
The music industry appears open — but real access to streaming platforms is controlled by complex, opaque layers. Below are the three dominant paths, each with structural flaws that limit independence and fairness.
Use the tabs below to explore:
Examples/References: The Orchard, FUGA, Ingrooves, Believe, IDOL
These are infrastructure companies that handle ingestion, reporting, metadata, delivery, and sometimes licensing — often working on behalf of other distributors, labels, or Merlin members.
Core issues:
Many of these firms are closed to the public — invite-only or deal-based.
They often act as invisible intermediaries — you may not even know your aggregator uses them.
Their pricing and delivery terms are private, with no standard rates.
Most still don’t sign artists directly — they only serve clients like Merlin members, large indie labels, or major-connected aggregators.
Distributors hold the technical keys to the streaming economy, but they don’t usually deal with artists — and they’re not always transparent.
Examples/References: DistroKid, TuneCore, CD Baby, RouteNote, Amuse, RecordJet
Aggregators are marketed as “direct access” tools for independent artists. In reality, many rely on underlying distributors to actually deliver your music — and those distributors may rely on yet another distributor.
What’s really happening:
📤 You upload to Aggregator A
🔁 Aggregator A sends it to Distributor B (backend provider)
🔁 Distributor B routes it via Distributor C (a Merlin or direct-access company)
📤 Finally delivered to DSP
Flaws in this model:
❌ Each layer takes a cut — sometimes flat fees, sometimes percentages
❌ Reporting and payments are delayed by every extra step
❌ You don’t know who’s actually delivering your music
❌ You have no leverage to resolve issues at higher layers
❌ Royalty rates remain bottom-tier (~$0.002/stream)
This system creates the illusion of open access while routing everything through a stack of invisible middlemen.
Examples/References: Merlin Network, Repost, some regional rights groups and federations
Merlin is a licensing body for independent labels, offering better revenue shares and access to streaming tools by negotiating collectively — but not just anyone can join.
Flaws in this model:
❌ You can’t join unless you’re already on DSPs with measurable success
❌ Many Merlin members still use independent distributors to deliver content
❌ You have no personal negotiation with DSPs — deals are collective
❌ Access is gated by volume, geography, and reputation
❌ The model excludes startups and new labels
Merlin improves conditions for established indies — but it reinforces the wall between insiders and outsiders.
Examples/References: Universal, Sony, Warner, Believe, some Merlin-affiliated distributors
Direct DSP contracts give partners full access: ingestion APIs, reporting, playlist tools, early features, and higher per-stream rates. But they are reserved for the very few.
Flaws in this model:
❌ Closed-door entry — only large entities with high volume get invited
❌ Heavy technical requirements — you must manage delivery, encoding, metadata, rights, and QC
❌ DSPs can change the deal terms unilaterally
❌ Even some Merlin members still don’t qualify for direct access
Direct deals give the most control and revenue — but only to those who already operate at industrial scale.
A Built-In Imbalance
The system is designed to preserve the power of those who already have it:
- Majors and established players get better rates and access.
- Small players pay more and earn less.
- The system blocks real upward mobility.
A pyramid structure disguised as an open platform — one that harms innovation, diversity, and fairness.
Does it Violate EU Law?
It may be in violation of:
- Article 102 TFEU: prohibits abuse of dominant position.
- Digital Markets Act (DMA): mandates fair access and transparency.
If it can be documented that:
- DSPs deny access without justification,
- only Merlin and majors truly have access, and
- small players are systemically excluded
… then this could constitute illegal market foreclosure.
Source: EU Digital Markets Act (DMA)
What can be done?
- Regulation and Oversight
EU and national authorities should investigate and assess the legality of current access structures. - Transparency
Royalty rates and access criteria should be published — by both DSPs and intermediaries like Merlin. - Strengthening Alternatives
Publicly supported, transparent alternatives to majors and Merlin should be developed. User-centric payment models (UCPM) should be explored.
Sources: CERRE – Centre on Regulation in Europe & Fair MusE project
Conclusion
Streaming has become the new core of the music industry — but it is not equal for everyone. Access is controlled by structures that consolidate power with majors and Merlin, while financial terms reinforce inequality.
Is the digital music economy truly free and fair — or are we simply facing a new monopoly in a new form?