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Spotify and UMG Reach Long-Term Agreement on Streaming Fees

April 10, 2017
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Universal Music Group and Spotify have come to a long-term agreement to have UMG songs streamed on the current stream king.


Universal Music Group and Spotify have come to a long-term agreement to have UMG songs streamed on the current stream king.

The deal between Universal and its group of labels and the streaming giant was reached recently and is finalized except for the final signatures from the heads of each company. Before the long-term deal the two parties had been operating on a month-to-month basis.

Overall, it’s a big win for Spotify’s profit line because it means UMG will take a smaller fee out of the company’s revenue stream. Before the deal record companies accounted for roughly 55 percent of Spotify’s revenue while publishing companies accounted for 10-12 percent.

In return for retaining a larger slice of revenue, Spotify will give Universal more say in which artists’ new releases are kept off the streamer’s free tier.

With the way Spotify is set up currently record companies get paid a rate of 5 cents per 100 plays. For a record company like Universal that has a big selection of new music as well as some music legends who rack up plenty of plays every week, that amounts to a decent chunk of change. That’s not necessarily the case for budding independent artists, but the streaming service does make a solid attempt to get more exposure of independent artists to users. With Universal agreeing to Spotify’s terms, it’s likely that the company will focus on negotiating with Sony’s umbrella of labels.

Read the full story on the New York Post website



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