Spotify Tackles Controversial Royalty Bundling with UMG Deal
January 29, 2025
Universal Music Group and Spotify have reached a multiyear distribution agreement that is said to improve payment to artists and authors. The new terms address concerns over a controversial Spotify music-audiobooks royalty bundling policy alleged to have reduced songwriter royalties in order to pay audiobook rightsholders. The policy resulted in a Federal Trade Commission complaint filed by the National Music Publishers Association in June. “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 companies jointly announced.
The UMG agreement “marks the first direct license between Spotify and a major publisher in several years,” reports Variety, which confirmed that “the deal improves at least some of the payment structure of Spotify’s controversial music-audiobooks ‘bundling’ deal.” Universal Music Publishing Group CEO Jody Gerson was a vocal critic of the bundled approach.
“Having been under fire before for not providing adequate royalties to artists, the streaming platform and music corporation are renewing their “commitment to artist-centric principles” through Spotify’s application of fraud detection and enforcement to ensure proper payouts for audience engagement,” writes Deadline.
In a Spotify Newsroom post, UMG Chairman and CEO Lucian Grainge couched the deal as suitable for “streaming 2.0,” while Spotify founder and CEO Daniel Ek said the pact represents the type of “innovation [that] is key to making paid music subscriptions even more attractive to a broader audience of fans around the world.”
By driving audience engagement and improving the relationship between artists and the industry’s biggest streamer, the new collaboration positions the industry “for continued subscriber growth and retention,” the announcement suggests.
The new agreement “also 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 explained.
NMPA President and CEO David Israelite said in Variety that “the announcement of a deal between Spotify and UMPG bodes well for the industry and is a clear sign that Spotify felt the backlash to its bundling scheme. While we do not have details of the agreement beyond what was in the press release, it appears that it increases royalty rates, which is good news for the entire industry.”
Related:
Spotify Paid Out $10 Billion to the Music Industry in 2024 – $1 Billion More Than Last Year – and $60 Billion Total, Variety, 1/28/25
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