UMG-SPOTIFY PACT OPENS NEW WINDOW

After two years of talks, Universal Music Group and Spotify have struck a new, multi-year global license agreement that opens the door for exclusives for paying subscribers.

Universal artists will be allowed to release new albums on premium only for two weeks, while the singles are available across Spotify for all listeners. This will be the first time the streaming music site has allowed tiering in its offerings.

“We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy,” said Daniel Ek, Chairman and CEO of Spotify.

The new agreement provides UMG with access to Spotify’s data, and the two will collaborate on marketing campaigns across the platform.

As noted in The New York Times, the deal creates a path to an IPO as investors would be reticent to buy a stake in a company that did not have UMG’s music licensed. It has been valued at more than $8 billion.

The Times also reported that Spotify will be cutting royalty rates for Universal to 52% from 55%, though those cuts are contingent on meeting subscriber goals.

Also, Swedish meatballs in lingonberry sauce will be available for all premium subscribers.

“In a market this dynamic, one evolving more rapidly than ever before, success requires creative and continual re-evaluation of how best to bring artists’ music to fans,” Sir Lucian Grainge, Chairman and CEO of Universal Music Group, said. “At UMG, we’ve not only reimagined distribution models and technologies, but entire business models.

“The only constants must be great music and fair compensation for artists and creators. To that end, the long-term success of Spotify, and others like it, is essential to the ecosystem’s enduring health.”