Digital Service Provider (DSP)

In-Depth Explanation

What is a Digital Service Provider (DSP)?

In the modern music industry, Digital Service Provider (DSP) is the formal, catch-all business term used to describe any consumer-facing platform that delivers digital music or audio over the internet.

While everyday consumers just say "streaming apps," industry professionals, lawyers, and Digital Distributors use the term DSP to broadly cover the entire ecosystem of digital consumption.

Types of DSPs

DSPs are generally categorized by the specific type of service they offer to the consumer:

1. Interactive Streaming (On-Demand)

These are platforms where the user has total control over exactly what song they want to hear, when they want to hear it, and can skip tracks infinitely.

• Examples: Spotify, Apple Music, Amazon Music Unlimited, Tidal, YouTube Music.
• Royalty Implication: Because the user chooses the specific song, these platforms must pay both Performance Royalties (for the broadcast) and Mechanical Royalties (for the temporary digital reproduction).

2. Non-Interactive Streaming (Internet Radio)

These are platforms where the user selects a genre or a "seed track," but the algorithm decides the playlist. The user cannot choose the specific next song and has limited skips.

• Examples: Pandora (Free Tier), iHeartRadio, SiriusXM (Satellite).
• Royalty Implication: Because they function like traditional radio, they do not pay mechanical royalties. However, they do pay a digital performance royalty for the sound recording, known as Neighboring Rights, which in the US is collected by SoundExchange.

3. Digital Download Stores

Platforms where users purchase permanent digital copies of audio files (MP3s, WAVs) to keep on their hard drives.

• Examples: iTunes, Beatport, Bandcamp, Amazon Digital.
• Royalty Implication: These sales generate a much higher, fixed statutory mechanical royalty (currently $0.124 in the US) rather than a microscopic fractional streaming royalty.

The DSP Ecosystem

As an independent artist, you cannot interact with a DSP directly. You cannot walk into Spotify headquarters with a USB drive and ask them to put your song on their app.

The industry is structured so that DSPs only deal with aggregators—specifically Record Labels and Digital Distributors (like DistroKid or TuneCore). Your distributor acts as the middleman; you pay them a fee to encode your audio and metadata into the strict XML format (like DDEX) that the DSPs require.

When you look at your distribution dashboard, the "Stores" you select to send your music to are the DSPs. The distributor collects the royalties from all the various DSPs globally, aggregates them into one lump sum, and pays them out to you.