Universal Music Group, the world’s largest music company, and streaming behemoth Spotify on Sunday announced a multi-year direct deal that will affect both recording and publishing royalty rates.
The joint statement did not provide details on the value or specific length of the agreement, but said UMG and Spotify “will collaborate closely 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.
The deal notably “establishes a direct license between Spotify and Universal Music Publishing Group across Spotify’s current product portfolio in the US and several other countries,” the companies said.
Trade publication Billboard said it was the first direct deal Spotify has struck with a publisher since 2018’s Music Modernization Act, which updated US copyright law with the intent to overhaul statutory licensing for the digital age and improve the way songwriters get paid for streams.
It appears to indicate a sign of compromise when it comes to Spotify’s controversial “bundling” rollout, which saw the Stockholm-based company reclassify its paid streaming plans to include audiobooks — meaning payments were split between music and book publishers.
“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 Mechanical Licensing Collective — a non-profit entity under the US Copyright Office that was created under the MMA — sued Spotify over the issue, saying the company 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.
“This agreement furthers and broadens the collaboration with Spotify for both our labels and music publisher, advancing artist-centric principles to drive greater monetization for artists and songwriters, as well as enhancing product offerings for consumers,” Grainge said.
The partnership will help Spotify make “paid music subscriptions even more attractive to a broader audience of fans around the world,” that company’s CEO Daniel Ek said in the statement.