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Managers criticise the continued secrecy as Universal agrees new Spotify deal

By | Published on Thursday 6 April 2017

Spotify

The UK’s Music Managers Forum yesterday welcomed the news that Spotify had reached a new deal with Universal Music. However, the trade body criticised the continued secrecy that surrounds the deals made between the major record companies and the streaming services. This secrecy means that artists signed to or distributed by those labels are not allowed to know the specifics of how their music is being monetised.

As previously reported, Spotify confirmed on Tuesday that – after long drawn out negotiations – it had signed a new multi-year licensing deal with the world’s biggest record company. It needs such arrangements in place before it heads to Wall Street for its widely anticipated IPO. The two companies said that the new deal would “advance their partnership to ensure that streaming realises its full transformational potential for artists, labels and fans”.

We officially know that the new deal will allow Universal to window its releases off Spotify freemium for two weeks after release and that the major will get access to more data. It’s also unofficially known that the new arrangement alters the financial terms between Spotify and the mega-major, though it’s thought the more preferential rates the streaming firm has secured are dependent on it meeting certain growth targets.

Artist managers argue that they need to know more detail about the deals done between the labels and the streaming services, so that they can properly audit the streaming royalties their artists receive. This would allow them to better understand the streaming business and advise their clients on which platforms to champion. They could also then be reassured that the value of the booming streaming market is being fairly shared between all stakeholders within the music community, ie artists and songwriters as well as labels and publishers.

This lack of transparency was identified as the key area of concern by phase two of the Music Managers Forum’s ‘Dissecting The Digital Dollar’ research, which was conducted by CMU Insights last year. After significant efforts to secure a commitment on transparency from the majors in the UK failed earlier this year, the MMF – along with the organisations representing music creators, ie BASCA, MPG, FAC and the Musicians’ Union – called on government to intervene.

Noting that the new deal struck between Universal and Spotify – and the pending deals due to be agreed with Sony Music and Warner Music – continue to shrouded in secrecy, the CEO of the MMF, Annabella Coldrick, said yesterday: “The news that Spotify and Universal have struck a new licence deal to help support continued streaming growth is welcome. However the lack of transparency around the terms of such deals means it is still impossible to properly understand and verify the flow of money from fan to artist and ensure those who create the music share in the growth in its value. Transparency is essential and should be baked into any new deal, not hidden behind NDAs”.

Premium subscribers can read this recent CMU Trends article on the ongoing transparency debate here. Meanwhile, the issue will be debated at two upcoming CMU Insights events, at Canadian Music Week later this month, and The Great Escape next month.


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