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Spotify Royalties

With Eye Towards Profitably, Spotify Negotiates Lower Music Royalties

July 12, 2017

Spotify has signed a new licensing deal with Sony Music Entertainment that reduces its royalty payments. In doing so, the No. 1 music streaming company in the world could get closer to profitably and a U.S. stock market listing, according to Reuters.

With the new agreement, Spotify will now restrict new albums to paying subscribers for two weeks before offering access to free users. Sony’s top artists include Adele, Beyoncé, and Shakira.

In April, Spotify signed a similar deal with Vivendi’s Universal Music Group. Warner Music Group and Spotify are said to be in similar talks, according to Billboard.

In 2016, Universal held a 28.9 percent share of global music label revenue, while Sony Music generated 22.4 percent and Warner 17.4 percent. Independent labels made up the remaining 31.3 percent, according to MIDiA Research.

While Spotify’s 50 million paying subscribers easily beats Apple Music’s 27 million, the former still operates at a loss. The Swedish-based company hopes lower royalty payments will lead to profitability and a listing on a U.S. stock exchange by 2018.

Like Apple Music, Spotify Premium is $9.99 per month. Family and student plans are also available.

Spotify Music
Spotify Music

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