Music Distributor DistroKid Raises Money at $1.3 Billion Valuation

Music Distributor DistroKid Raises Money at $1.3 Billion Valuation

Millions of musicians have used DistroKid to make money from their art. Now DistroKid is making some money of its own.

DistroKid has raised money from Insight Partners that values the music distribution and tools company at $1.3 billion, according to founder Philip Kaplan. Kaplan and Insight declined to say how much money Insight had invested, or how large a stake it was acquiring.

The deal establishes the New York-based company as one of the most valuable music distributors in the world, and a leader in the market for do-it-yourself music releases. DistroKid charges its customers $19.99 a year to use its tools, which include distribution across all major streaming services and social networks.  An artist who released music and makes no money still pays $19.99, while an artist who makes $1 million on a song also has the same rate.

That price point means that artists of any level can use the company’s suite of tools, and musicians of a certain stature may opt for DistroKid because it allows them to retain ownership. More than 2 million acts use DistroKid, including the rappers Ludacris and 21 Savage.

Record labels release music that accounts for the majority of sales every year, including most of the music from the biggest acts in the world. But their share of overall music sales has declined as more musicians turn to distribution services that don’t demand any ownership of their copyrights.

Music released by independent labels accounted for $8 billion of global recorded music revenue in 2020, or about 35%, according to Midia. Artists who released music on their own without any label grossed about $1.2 billion, a new record. Kaplan said Distrokid is the largest player in that market, and now has a hand in releasing between 30% and 40% of all new music.

“My general feeling is that if an artist becomes successful, it’s because the artist did it and the distributor didn’t have anything to do with it,” Kaplan said in an interview. “All we do is move files around. We’re just doing it better and faster and cheaper than anyone else.”

Millions of artists now use DistroKid’s services very year, uploading between 15,000 and 25,000 songs a day. Singer Arizona Zervas used DistroKid to release his smash hit “Roxanne,” which reached the top 10 in the U.S., Australia, Canada and Ireland. That earned him a deal with Columbia Records. 

Kaplan founded DistroKid in 2013 after a few frustrating attempts at releasing music from his death metal band. A computer programmer by trade, Kaplan previously founded a website that wrote about failed companies of the dot-com bubble, as well as an email newsletter service he sold to Mailchimp in 2011. When not programming, Kaplan is a drummer.

The company raised money from Silversmith Capital Partners in 2018, though it didn’t disclose the amount of funding or its valuation at the time. Insight has little background in media or music investments, but it came upon DistroKid when junior members of the team brought it to the attention of Deven Parekh, a managing partner. His own son had used DistroKid to upload his music.

“We talked to musicians. We talked to labels. Time and time again it came back to this was the best known company with the best product at the most attractive price point,” Parekh said in an interview.

While DistroKid handles music, it’s at its core a technology company. It plans to use the money from Insight to build new tools for the more than 2 million artists that use its services. The company has built tools that allow artists to more easily split earnings, and something called the vault that enables the unlimited free backups for their master recordings. A tool called social phone allows artists to post a phone number publicly so they can send texts to hundreds of fans to alert them to a new album.

DistroKid now employs more than 100 people, though it’s small enough that Kaplan still programs some of the code.

“The growth has been wild, but mission has not changed,” he said in an interview. “DistroKid set out to make it as easy to release a song on streaming services as it is to post a photo on Instagram.”

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