Spotify has struck a licensing deal with Sony Music Entertainment after months of negotiations.
Sony is the second major record label to sign a deal with Spotify, following Universal Music Group which signed a new multi-year licensing deal with the digital music service in April of this year. Detailed terms of Sony’s deal with Spotify weren’t immediately made clear, but they are probably similar to Universal’s.
Spokespeople for both Sony and Spotify declined to comment on the matter.
According to Billboard, Universal’s deal gives Spotify a break on the percentage of revenue that it must pay Universal in royalties as its subscriber base grows. Universal’s deal also gives its artists the ability to make their new albums available to paid subscribers only for two weeks after it is released – a tactic called “windowing.”
Spotify’s deals with two major record labels should make its path to go public much easier since having a strong music library will make it more attractive to investors. It has been under pressure to offer its shares to the public due to the $1 billion in debt it raised last year. Spotify is reportedly considering a “direct listing” instead of a traditional IPO. Such an unusual move could cut its interest payments; but music executives, speaking to Billboard, say it could also mute investor buzz and appetite for shares.
Warner Music Group is the only other major record label that has not signed a deal with Spotify, but the two remain in licensing talks. A source tells Variety that the company is holding out for the best possible deal.
Danita White for TechFunnel.com