Universal Music Group and Spotify Ink Multi-Year Deal
Direct Deal Affects Recording and Publishing Royalty Rates
Universal Music Group, the world’s largest music company, and streaming behemoth Spotify on Sunday announced a multi-year direct deal that will affect both recording and publishing royalty rates.
Collaboration for Streaming Innovation
The joint statement did not provide details on the value or specific length of the agreement, but said UMG and Spotify “will collaborate closely to advance the next era of streaming innovation.”
New and Evolving Offers
“Artists, songwriters and consumers will benefit from new and evolving offers, new paid subscription tiers, bundling of music and non-music content, and a richer audio and visual content catalog,“ the statement read.
Direct License for Publishing Group
The deal notably “establishes a direct license between Spotify and Universal Music Publishing Group across Spotify’s current product portfolio in the US and several other countries,“ the companies said.
Sign of Compromise on Bundling
Trade publication Billboard said it was the first direct deal Spotify has struck with a publisher since 2018’s Music Modernization Act, which updated US copyright law with the intent to overhaul statutory licensing for the digital age and improve the way songwriters get paid for streams.
It appears to indicate a sign of compromise when it comes to Spotify’s controversial “bundling” rollout, which saw the Stockholm-based company reclassify its paid streaming plans to include audiobooks – meaning payments were split between music and book publishers.
Spotify’s Response
“Spotify maintains its bundle, but with this direct deal [with UMPG], it has evolved to account for broader rights, including a different economic treatment for music and non-music content,“ a Spotify spokesperson told Music Business Worldwide in a statement.
Legal Action Against Spotify
The Mechanical Licensing Collective – a non-profit entity under the US Copyright Office that was created under the MMA – sued Spotify over the issue, saying the company was grossly underpaying songwriters, composers and publishers.
CEO Statements
UMG’s CEO, Lucian Grainge, said in a statement that the deal is an example of his company’s “vision” for “Streaming 2.0” – which intends to increase value via subscription levels and selling products over a focus on scale in streaming.
“This agreement furthers and broadens the collaboration with Spotify for both our labels and music publisher, advancing artist-centric principles to drive greater monetisation for artists and songwriters, as well as enhancing product offerings for consumers,“ Grainge said.
The partnership will help Spotify make “paid music subscriptions even more attractive to a broader audience of fans around the world,“ that company’s CEO Daniel Ek said in the statement.
Conclusion
The partnership between Universal Music Group and Spotify aims to drive greater monetization for artists and songwriters, as well as enhance product offerings for consumers. The deal marks a significant shift in the way music is streamed and compensated, and could set a precedent for future agreements between music companies and streaming services.
FAQs
Q: What is the value of the deal?
A: The value of the deal was not disclosed.
Q: How long is the agreement for?
A: The length of the agreement was not disclosed.
Q: What does the deal mean for artists and songwriters?
A: The deal aims to increase value for artists and songwriters through subscription levels and selling products, and could lead to greater monetization for them.
Q: What does the deal mean for Spotify?
A: The deal could help Spotify make paid music subscriptions more attractive to a broader audience of fans, and could enhance its product offerings.