Spotify To Strike Deal With Sony
Music streaming giant Spotify is said to have signed a new deal with Sony Music, ahead of a seemingly-inevitable IPO.
That agreement gave Universal artists more control over how Spotify distributes their content. They can hold back new albums to paid subscribers for up to two weeks, while offering singles available to free users.
Spotify, in turn, gained a break on royalties if it hits certain targets. Essentially, the more users who listen to UMD content, the less money Spotify is obligated to pay out in royalties.
The UMD deal was signed in April.
A third deal with the Warner Music Group is still believed to be under negotiation.
It’s believed that arrangements like this are crucial to Spotify’s efforts to reconfigure itself as a profitable company. To date, the company has never once finished the financial year with a profit.
The company has yet to release an official statement on the Sony deal.
While Spotify still has a strong lead over Apple Music, the company’s move to raise $1B in debts in March 2016 came with the condition that the company finally offer its shares to the public.
The longer Spotify wait to do this, the more time they’ll have to sign these new, more profitable deals with major content companies. However, it’s understood that a prolonged prologue to the company going public will also see it under the accelerated interest terms of the $1B loan.