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Spotify lets Universal limit free music

News, 06 April 2017
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LOS ANGELES/STOCKHOLM: Spotify, the loss-making music streaming service, has signed a long-term licensing deal with Universal Music Group (UMG), which will put some new albums behind a temporary paywall.

Under the terms of the agreement, Universal artists will be able to release their music on Spotify's premium tier for two weeks before they appear on its free service.

"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," said Daniel Ek, Chairman and CEO of Spotify, in a company statement.

"Starting today, Universal artists can choose to release new albums on Premium for two weeks only, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for our listeners to enjoy."

According to Spotify, the new agreement will also provide UMG with "unprecedented" access to data, which it is expected to use to develop new tools to further its engagement with music fans.

"At UMG, we've not only reimagined distribution models and technologies, but entire business models," said Sir Lucian Grainge, Chairman and CEO of Universal Music Group.

"The only constants must be great music and fair compensation for artists and creators. To that end, the long-term success of Spotify, and others like it, is essential to the ecosystem’s enduring health."

In return for the ability to restrict new albums to Spotify's 50m subscribers for a fortnight, UMG is reportedly willing to cut the royalty fees that Spotify has to pay.

According to Recode, the break Spotify may get on its royalty fees will depend on certain subscriber metrics, but nonetheless will give the company a boost as it prepares for an initial public offering, possibly in 2018.

Spotify, along with other major streaming services, such as Apple Music, was very recently credited with helping to drive up music sales in the US to $7.7bn.

The Recording Industry Association of America last week reported that total revenues from streaming platforms rose 68% to $3.9bn in 2016, or just over half (51%) of the US music industry's total revenues.

Data sourced from Spotify, Recode; additional content by WARC staff

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