Warner Music Group head Robert Kyncl, whose company’s finalized a new deal with Spotify. Photo Credit: Robert Kyncl / LinkedIn
On the heels of Universal Music’s Spotify agreement – including a first-of-its-kind Universal Music Publishing Group direct deal – Warner Music and the streaming service have finalized an expanded licensing pact of their own.
Warner Music Group (NASDAQ: WMG) unveiled that bolstered Spotify tie-up this morning, which also saw the major label post its financials for 2024’s final three months.
Keeping the focus on the licensing renewal, Spotify and WMG indicated that the multi-year partnership is expected to “deliver new fan experiences, a deeper music and video catalog, further paid subscription tiers, and differentiated content bundles.”
As a whole, those offerings align with Spotify’s expansion ambitions (particularly in video) and the majors’ well-documented subscription revenue objectives. And with overall subscription revenue growth plateauing at the majors as Spotify grapples with flatlining Individual subs in the U.S., the time is seemingly right to embrace higher-priced (and superfan) tiers without alienating existing paid users.
Next, Warner Music and Spotify in their brass-tacks release said the agreement “builds on the companies’ existing alignment around ‘artist centric’ royalty models that reward and protect the power of artists to attract and engage audiences.”
Despite the vague description, it’ll be worth monitoring the byproducts of the enhanced artist centric collaboration – which includes Spotify’s controversial 1,000-stream royalties minimum and more.
Unsurprisingly, given Spotify’s much-criticized bundling craze and the resulting royalty fallout for songwriters and publishers, Warner Chappell has joined Universal Music Publishing Group in shifting to a direct deal with the streaming service.
“Importantly,” WMG and Spotify spelled out here, “the new publishing agreement introduces a direct licensing model with Warner Chappell Music in several additional countries including the U.S., reinforcing songwriters’ benefit in this evolving landscape.”
Though the Spotify pact (and especially the WCM direct deal) came up during Warner Music’s calendar Q4 earnings call, CEO Robert Kyncl didn’t provide too many supplemental details.
However, the Warner Music head did disclose a fresh agreement with Amazon Music, which, following an “artist-centric” extension with Universal Music in December, recently upped prices on its audiobook-equipped tiers.
Additionally, Kyncl emphasized a goal of “enabling a lot more experimentation” at streaming services and touched on related undertakings at Apple Music (besides Spotify, Amazon Music, and his former employer YouTube, where various music expansions are underway).
Closing on the publishing side, Kyncl once again opted against getting into specifics, but described his company’s “number one priority” as protecting artist and songwriter rights. WMG execs “feel very happy with this deal,” he summed up of the Spotify partnership.