Spotify Strikes New Deal for Warner Music Catalog
April 01 2020 - 10:36AM
Dow Jones News
By Anne Steele
Spotify Technology SA and Warner Music Group have reached a new
global licensing agreement, the companies said, ending a
contentious yearslong negotiation between the streaming giant and
the third-largest music label.
Spotify now holds new long-term licensing agreements with two of
the three major recorded-music companies. It has had deals in place
for some time with Sony Corp.'s Sony Music Entertainment and a
consortium of independent labels. Negotiations with Vivendi SA's
Universal Music Group, the largest of the music companies, are
continuing to progress, according to people familiar with the
matter.
Warner, controlled by billionaire Len Blavatnik's Access
Industries Inc., is the smallest of the major music companies by
market share, but its negotiations with Spotify were widely seen as
the most contentious and hardest to complete.
The relationship became strained as Spotify prepared to launch
in India last year, according to people familiar with the
discussions. The companies couldn't come to terms on licensing
rates in the country, viewed as a key expansion for Spotify with
its massive population, but problematic because its price points
are lower than more developed markets. Spotify launched there at
the end of February of last year, without the rights to Warner's
music.
The new agreement covers all territories Spotify's service
currently operates in, plus any future markets it expands into.
Executives have talked about South Korea and Russia as
possibilities.
The deal wraps up a loose end for Warner as it seeks to go
public. The company filed documents for an initial public offering
in February, amid a streaming-fueled resurgence in the music
industry. Warner Music, which encompasses Atlantic Records, Warner
Records and Elektra Records, touts Ed Sheeran, Cardi B, Lizzo and
Neil Young on its roster.
Spotify, the largest streaming service globally by
subscriptions, pays out about 70% of its revenue to labels and
music publishers. Executives have said they didn't expect any
change in the rates they were paying the labels, and that
negotiations were more focused on Spotify's ability to expand into
new markets and build out its two-sided marketplace -- selling
tools and services to artists and their teams.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 01, 2020 10:21 ET (14:21 GMT)
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