Spotify has entered a long-term deal with one of the biggest record companies in the world, Universal Music Group.
Music Streaming Firm Spotify In Hefty Deal with Universal
Music streaming company Spotify has been on the lookout for long-term deals with renowned labels including Warner and Sony, amid reports of a possible IPO in the coming year.
Artists signed to Universal will now be able to offer their music the Spotify Premium service before the songs can be available on the free service.
In a statement, Spotify chairperson and chief executive Daniel Ek said, “Starting today, artists on Universal have the option of releasing their new albums on the Premium tier for just two weeks, allowing subscribers an early chance to sample the complete creative work, the singles are however available for all listeners to enjoy.”
Spotify, established just nine years ago, is still a loss making company but has managed to garner 100 million users and 50 million subscribers. It also plays a key role in the global music industry.
Sir Lucian Graing, chief executive and chairperson of Universal said of the deal, “Working with these digital services brought us the industry’s first significant growth in almost twenty years.”
He added, “Today, streaming makes up the majority of the business and the long term success of Spotify and others is critical to the ecosystem’s health.”
Last month, Spotify became the first music streaming business to surpass the 50 million subscribers market.
The streaming service garnered 10 million subscribers in less than six months, gaining a head start from Apple Music, its closest rival.
However, Spotify, which costs a monthly fee of £10 in the UK continues to face steep competition from Amazon, Google and Apple, which have a much larger budget.
Mark Mulligan, a Midia Research music analyst said, “Spotify stands out as a success in the music streaming industry globally. No other company comes close in regard to paid subscribers.”
In December 2016, Apple Music had garnered about 20 million subscribers, only 18 months after launching.
Amazon Music and Deezer are Spotify’s close rivals too.
The challenge for Spotify is that Apple and Amazon have deep pockets and these companies are not in a hurry to make a profit from their streaming service.
Google’s investment in its own Google Play Music service has allowed it to avail more songs offline. Google is also making use of artificial intelligence to create improved playlists.
It is anticipated that Spotify will list its shares on the stock market in the coming year. In spite of reporting a 80% growth rate in revenues in its most recent annual results, the streaming service is yet to turn in a profit.