Universal inks multi-year deal with streaming platform Spotify

Universal Music Group, the world's largest music company, and streaming behemoth Spotify announced on Sunday a multi-year direct deal that will affect recording and publishing royalty rates.

The joint statement did not provide details on the value or specific length of the agreement. Still, it 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 companies said 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."

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 indicates a compromise regarding Spotify's controversial "bundling" rollout. The Stockholm-based company reclassified 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.

Yung Gravy arrives at Universal Music Group's 2024 66th GRAMMY Awards After Party held at nya studios WEST on February 4, 2024 in Hollywood, Los Angeles, California, United States. Photo by Image Press Agency / NurPhoto / NurPhoto via AFP

The Mechanical Licensing Collective—a non-profit entity created under the MMA under the US Copyright Office—sued Spotify, 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 sell 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.

In the statement, Spotify CEO Daniel Ek said that the partnership will help make "paid music subscriptions" even more attractive to a broader audience of fans worldwide. "