Universal, Spotify ink multi-year deal

LOS ANGELES

Universal Music Group, the world's largest music company, and streaming behemoth Spotify on Jan. 26 announced a multi-year direct deal that will affect both recording and publishing royalty rates.

The joint statement did not provide details on the value or specific length of the agreement but 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 deal notably "establishes a direct license between Spotify and Universal Music Publishing Group across Spotify's current product portfolio in the U.S. and several other countries," the companies said.

Trade publication Billboard said it was the first direct deal Spotify has struck with a publisher since 2018's Music Modernization Act, which updated U.S. copyright law with the intent to overhaul statutory licensing for the digital age and improve the way songwriters get paid for streams.

It appears to indicate a sign of compromise when it comes to Spotify's controversial "bundling" rollout, which saw the Stockholm-based company reclassify its paid streaming plans to include audiobooks, meaning payments were split between music and book 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.