The largest music organization in the world, Universal Music Group, and streaming giant Spotify announced a multi-year direct agreement on Sunday that will impact publishing and recording royalties.
Although the joint statement did not specify the agreement’s duration or value, it did indicate that 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 agreement in particular “establishes a direct license between Spotify and Universal Music Publishing Group across Spotify’s current product portfolio in the US and several other countries,” according to the firms.
According to trade journal Billboard, it was Spotify’s first direct agreement with a publisher since the Music Modernization Act of 2018, which modernized US copyright law in an effort to modernize statutory licensing for the digital era and enhance composers’ compensation for streams.
Regarding Spotify’s contentious “bundling” rollout, which saw the Stockholm-based business reclassify its paid streaming plans to include audiobooks—meaning royalties were divided between music and book publishers—it seems to point to a 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 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 collaboration would assist Spotify in making “paid music subscriptions even more attractive to a broader audience of fans around the world,” according to a statement released by the company’s CEO, Daniel Ek.
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