Spotify negotiates lower royalty rate with major music label | Cult of Mac

Spotify negotiates lower royalty rate with major music label


Spotify is currently leading the streaming music battle.
Photo: Jim Merithew/Cult of Mac

Spotfiy has managed to negotiate a reduced royalty rate with Sony Music Entertainment, and is also in talks with Warner Music Group, claims a new report.

In return, Spotify will reportedly hold back albums to paying subscribers for two weeks before making them available to customers on Spotify’s free tier. A similar multi-year deal was agreed with Vivendi’s Universal Music Group earlier this year.

According to Reuters, Spotify is currently valued at $13 billion, despite currently running at a loss, even though revenue has grown 50 percent over the past year. It is supposedly lining itself itself up for a listing on the New York Stock Exchange later this year or in early 2018.

At present, Spotify is smashing Apple Music in terms of subscribers — with more than 140 million active users worldwide, although this number includes its free, ad-support tier.

By comparison, Apple confirmed during its Worldwide Developers Conference (WWDC) event this year that Apple Music currently has 27 million subscribers. Without a free tier, the service costs $9.99 a month for individuals, and $14.99 a month for families of up to six.

Apple’s own royalty rate with music labels hasn’t been disclosed, although Apple Music’s comparatively limited reach means it doesn’t have quite the same negotiating clout as Spotify.

Negotiating challenges

This wouldn’t the first time Apple has been undercut in terms of its music ambitions.

Last year, Amazon launched its new music streaming service Amazon Music Unlimited. With the service, users of the Amazon Echo can buy a subscription through the standalone device for a mere $3.99 per month. For those who don’t remember, one of the big rumors about Apple Music was that Apple wanted to charge users five bucks a month — only for the plan to be shot down by record execs and Apple settled on its $10 price point for Apple Music.

Which music service, if any, do you subscribe to? Leave your comments below.

Source: Reuters