Breaking Biz

Spotify x UMG deal: The devil is in the details

Spotify, the leading streaming music brand, has struck a new, multi-year global license deal with Universal Music Group, the world’s largest music company. With any deal of note, the devil is in the detail. And this is one of those deals. As part of the new pact, Spotify will allow UMG’s artists to window their albums to its paid users only for the first two weeks of a release. By adding-in those restrictions, Spotify gives users of its free tier a real incentive to upgrade.

“We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy,” explains Daniel Ek, Chairman and CEO of Spotify, in a statement unveiling the deal.

Ek said the new partnership was built on a “mutual love of music” between UMG and Spotify, and was intended to create more value for artists. For their part, UMG reportedly cut the royalty fees Spotify pays for its works. Spotify, which is expected to launch an IPO in 2018, hasn’t yet announced similar licensing structures with Warner Music or Sony Music.

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