July 12, 2017
Sony Music Entertainment has agreed to a new licensing deal with Spotify, which should be finalized in the coming weeks. “The agreement helps to clear the way for Spotify’s long-anticipated public offering, which is expected later this year or early next year,” reports Variety. An inside source suggests the deal is similar to the current Spotify agreements with Universal Music Group and digital rights agency Merlin. A major component of the deal is a windowing option, “whereby artists can withhold their releases from its free, ad-supported service for up to two weeks.”
Spotify posted statistics on its press site explaining that the service — now available in 60 global markets — features over 30 million songs, over 2 million playlists, and as of March 2017, more than 50 million subscribers and 140 million active users.
According to its 2016 financial statement, “Spotify showed an operating loss of some 349 million Euros ($389 million) compared with a 236 million Euro loss the previous year,” notes Variety. “Its gross profit was just $502 million.”
“This is explained by substantial investments that have been made during the year, mostly in product development, international expansion and a general increase in personnel,” as detailed in the filing.
The company also stated plans to pay record labels royalties of at least $2 billion during the next two years.