Another major label has come to and signed a deal with Spotify cementing their music licenses and making a Spotify IPO more likely.
Spotify have spent the past couple years negotiating with the major labels, working off of a month-to-month licensing basis for their music. It followed their giant rise in success which led to major artists (mainly Taylor Swift) questioning the new platform of streaming as it became evermore popular.
A few months ago Spotify finally mended their relationship with their first of the three major labels, Universal Music Group. The two came to a deal that would allow certain releases to be made exclusive to paying Spotify users for a limited time after release to increase revenues for new music. In exchange Universal accepted a lower royalty rate, about 52% instead of 55%, that will help Spotify move towards profitability.
The terms of Spotify’s deal with Sony haven’t been revealed yet and spokespersons have refused to comment as of yet but the deal is thought to be struck immediately. Whilst it no doubt gives Spotify some required stability as their growth continues to fail to reach profit, it also strengthens their position for an IPO which they have been discussing for a long time.
As soon as more details of Sony’s deal with Spotify are released you will be able to find them here on the RouteNote Blog.