Published: Wed, April 05, 2017
Science | By Carlton Santiago

Spotify deal with Universal Music deal removes key obstacle to IPO

Spotify deal with Universal Music deal removes key obstacle to IPO

The streaming service has not now announced any similar deals with other record companies, allowing Universal Music Group to be the first organization to experiment with the flexible policy. "As part of the deal, Spotify has agreed to allow new albums from Universal artists to be restricted to its premium service for up to two weeks moving forward", it writes.

We mentioned a rumor that Spotify would restrict albums to Premium-tier customers weeks ago, and it seems that Spotify has chosen a happy medium between making albums permanently exclusive and available to all.

Grainge added that streaming now represents the majority of the business, and thus "requires creative and continual reevaluation of how best to bring artists' music to fans ..."

Spotify, which has 50m paid subscribers, had previously insisted that songs should be available to users who listen to music for free, on its advertising-funded tier.

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In Tuesday's announcement, Lucian Grainge, chairman and CEO of Universal Music Group, expressed enthusiasm for the agreement while recalling the company's history with Spotify. Until now, the company's has had to renew its contracts with UMG on a monthly basis.

The deal comes at a time when streaming is fast becoming the industry's dominant business model around the world.

The new waiting period will be offered to artists with Universal Music Group, which owns brands that work with artists like Drake, Taylor Swift, Kanye West, Paul McCartney and Andrea Bocelli. As The Verge points out, Spotify has upcoming agreements with Warner Music Group and Sony Music Group in the works and both companies will likely want similar exclusive windows for their albums. Last month, the Financial Times reported that Spotify was on the brink of closing licensing deals that could take it closer to an initial public offering. But streaming music in 2016 led the industry to its first significant revenue growth since the late 1990s.

Working with streaming companies "brought us the industry's first real growth in almost two decades", said Lucian Grainge, chief executive of UMG.

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