The largest music company in the world, Universal Music Group, and streaming behemoth Spotify made the announcement on Sunday of a multi-year direct agreement that will have an impact on both the royalty rates for recording and publishing.
Although the joint statement did not provide specifics about the agreement’s value or duration, it stated that UMG and Spotify “will work closely together to advance the next era of streaming innovation.”
“Artists, songwriters and consumers will benefit from new and evolving offers, new paid subscription tiers, bundling of music and non-music content, and a richer audio and visual content catalog”, the statement read.
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The companies stated that the agreement “institutes a direct license between Spotify and Universal Music Publishing Group across Spotify’s current product portfolio in the US and several other countries.”
Since the 2018 Music Modernization Act, which updated US copyright laws with the intention to overhaul statutory licensing for the digital era and improve the way songwriters are paid for streams, Spotify has struck the first direct deal with a publisher, according to trade publication Billboard.
When Spotify’s controversial “bundling” rollout was implemented, the Stockholm-based company reclassified its paid streaming plans to include audiobooks, leaving payments to be split between music and book publishers, it seems to indicate a sign of compromise.
“Spotify maintains its bundle, but with this direct deal]with UMPG], it has evolved to account for broader rights, including a different economic treatment for music and non-music content”, a Spotify spokesperson told Music Business Worldwide in a statement.
The US Copyright Office-created non-profit organization The Mechanical Licensing Collective sued Spotify over the controversy, alleging that it was grossly underpaying songwriters, composers, and publishers.
UMG’s CEO, Lucian Grainge, said in a statement that the deal is an example of his company’s “vision” for “Streaming 2.0” — which intends to increase value via subscription levels and selling products over a focus on scale in streaming.
The collaboration with Spotify is expanded and strengthened by this agreement, which promotes artist-centric principles, increases revenue for artists and songwriters, and increases the company’s reach for both our labels and music publishers, according to Grainge.
According to CEO Daniel Ek, the partnership will help Spotify increase its appeal to “paid music subscriptions” in the statement.
Source: Channels TV
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