Business News Digital Labels & Publishers

Warner signs new Spotify deal – at last! 

By | Published on Friday 25 August 2017


Warner Music has finally got its big fat fountain pen out and put its mark on a new multi-year licensing deal with Spotify. It means the market-leading premium streaming service now has new licences from all three majors and the indie label-repping Merlin.

As much previously reported, Spotify required the new multi-year deals to be in place before it could list itself on the New York Stock Exchange. Meanwhile, the digital company needed to get listed sooner rather than later, because loan agreements it had entered into got more expensive to service the longer it took for the business to become a public company.

This strengthened the negotiating hand of the record companies a little. Though Spotify nevertheless insisted that it needed to reduce its revenue share commitments to the labels slightly, in order for its business plan to remain viable, not least because the big music publishers have successfully pushed their revenue share arrangements up a little in recent years.

It was never in the interest of the labels to scupper Spotify’s entire business model, given just how much of the record industry’s revenues now come from this one single service, and – of course – they all have equity in the Spotify company so will benefit from it staging a successful launch on Wall Street.

But Spotify’s need to list on a stock exchange as soon as possible meant the labels had leverage, and to that end secured things like windowing of new releases, data and marketing kickbacks and target-based royalty rates in the new deals.

Confirming that Warner had now reached a new agreement with Spotify, the mini-major’s Chief Digital Officer, Ole Obermann, took to the Instagrams yesterday (for some reason) and declared that: “It’s taken us a while to get here, but it’s been worth it, as we’ve arrived at a balanced set of future-focused deal terms. Together with Spotify, we’ve found inventive ways to reinforce the value of music, create additional benefits for artists, and excite their fans all over the world. Even with the current pace of growth, there’s still so much potential for music subscription to reach new audiences and territories”.

Artists signed to the majors are now looking forward to receiving detailed memos from their label partners setting out all the key terms of the new Spotify deals, so they can assess how it will impact on their own businesses. I mean, they won’t get any such memo, and instead artists will have to continue to navigate the new streaming business blinded by NDA, but you can always look forward with hope, right?