Spotify has announced artists signed to the Universal Music Group (UMG) label will have their albums exclusively available to Spotify Premium users. In a move that will please the music snobs among us, Spotify will offer Premium users early access to some albums. Universal is the largest of the big three, distributing music for acts including Drake and Ms Swift.
Launched in 2008, Spotify said last month it had reached 50 million paying subscribers, a rise of 25 percent in less than six months, extending its lead over Apple Music.
The agreement with UMG would help Spotify push its ongoing negotiations with Sony and Warner. Spotify, which now boasts more than 50 million paid subscribers, argued that its free service helps bring in new customers that are eventually converted to its paid service. The change takes effect immediately, so impending releases from artists such as Kendrick Lamar, Lorde, and Feist could make use of the new windowing strategy.
The multi-year global license deal will also see Spotify hand over its streaming data to the major label.
The companies are moving together in this new direction as they acknowledge that streaming "represents the majority of the business", said CEO of Universal, Sir Lucian Grainge, quoted in an official statement.
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In exchange for the concession, UMG has cut the royalty fees Spotify pays for its songs, according to people briefed on the deal. Working hand in hand with these digital services brought us the industry's first real growth in almost two decades.
The deal comes at a time when streaming is fast becoming the industry's dominant business model around the world.
How? "By delivering a comprehensive range of music experiences, providing more flexibility for new releases, and collaborating on innovative marketing campaigns across Spotify's platform". Spotify would have an easier time going public if it had a deal with at least one of the other majors, but it could probably have a successful offering without locking in every deal first.
In March, the Recording Industry Assn. of America announced that estimated 2016 retail revenues from recorded music in the United States grew 11.4% to $7.7 billion.
Spotify has defied the odds to retain its lead in music streaming, despite competition from Apple, Google and Amazon.